23-Mar-2019 written by : FSI-Team
When your CIBIL score is poor, then you can run into all kinds of challenges in life. It’s hard to get loans, credit cards, etc. and you may even lose some of the best job opportunities as many top MNCs have started screening the candidates on the basis of their credit score. However, there are several things that you can do to see a guaranteed improvement in your score. Some of these are:
A lot of people think that using credit cards can hurt their credit rating. However, the truth is that credit cards can actually improve CIBIL score, granted you know what you are doing.
Here is the thing- when you use plastic money responsibility, it can increase your creditworthiness i.e. the CIBIL score. However, if you use too many credit cards or use too much credit, then it can have the opposite effect.
The most important thing to keep in mind when using credit cards is that you must use them for select items. Ideally, your credit utilization must be below 30%. So, if your credit card limit is Rs. 1 lakh, then you should not spend more than Rs. 30,000 in a month.
If you are able to lower your credit utilization, then you can most certainly observe a positive effect on your CIBIL score.
Another important thing that affects credit score is your payment history. If you are repaying personal loans, credit card debt, etc., then it’s important that you make each payment on time every time. Delayed payments not only attract penalties, but they can hurt your credit rating as well. Also, don’t make the mistake of thinking that one late payment or two won’t make a difference. This is because most credit rating agencies including CIBIL take late payments quite seriously, and you can expect to lose several points even if you are late with just one payment.
Your credit score gets restricted when it’s based on just one or two types of credit. For instance, if your score is based on just personal loans or credit cards, then CIBIL can’t assess your creditworthiness in a comprehensive manner. However, if you expand and enrich your credit history, then it gives the lenders more confidence in your profile and it’s reflected in your score as well. So, if you want to boost your score, then try to build some history with other types of credit that you have never worked with before. For instance, if your history is based on just personal loans, then you can get a car loan. Similarly, if it’s based on just credit cards, then you can get a small personal loan.
You may find it surprising, but a really easy way to improve CIBIL score is to go over your credit report. The goal is to look for mistakes or discrepancies. Examples include typos in name, address, etc. or wrong information about your finances.
If you identify any mistakes, then you can contact your bank immediately and intimate them about the same. If your points are valid and mistakes have been made on their end, then they will contact CIBIL and update the records. Once the changes are reflected in your report, the score shall improve automatically. Usually, you have to wait just 1-2 months.
If you have ever defaulted on a loan in the past, then it means that there is old debt on your credit report. This is irrespective of whether you have chosen loan settlement or not, as debt whether partial or full is still debt and it’s never good for your credit rating.
If you want to see your credit score improve for sure, then it’s critical that you get the old debt removed from your credit report. For this, you can contact the lender and let them know that you want to clear the past dues. In most cases, they agree. All you have to do is pay the appropriate amount and then request them to have the old debt removed from the report. Once that’s done, you can see an improvement in your score.
Improving CIBIL score isn’t that hard, as you can see from the points above. Just be committed and have patience. You will see positive results for sure.