20-Sep-2016 written by : FSI-Team
Vivek applied for a home loan, there was a lucrative festival offer by a builder which he did not want to miss. However he was surprised when his loan application was rejected due to a poor credit score and consequently he missed the home deal.
Have you been in a situation like this ever when your loan application was rejected due to a low credit rating? Do you plan to apply for a loan in the near future? Or simply do you want yourselves to be credit healthy and be prepared to deal with any situation? If the answer to any of the above questions is yes then the below discussion is for you. We list out three steps that can help you boost your credit score.
First things first; awareness lays down the ground work on which the rest of the steps can be build. Awareness about Credit Information Report (CIR), what it contains, why is the credit score important, how is it calculated, how to read the CIR, how to interpret the score etc are all important aspects and being aware about them is mandatory. Checking the CIBIL score from time to time helps in finding out if your credit health is slipping. You can check free cibil score check online in India if required; this obviously is the first step as to boost your score the basic requirement is to find out what it is. Checking the score from time to times also ensures you are not caught unawares and can remedy the situation before it gets too tough.
So you have your CIR with you; so what is the next thing to do? If your credit rating is low (below 750) then you need to identify the reason for it. There may be various reasons for a low credit rating like a missed or late payments, too many credit enquiries, high credit utilization ratio, and higher proportion of unsecured loans, default on a loan that you have guaranteed or sometimes an error in your CIR. Any of the above mentioned aspects in isolation or together can harm your credit score. Just looking at the score may not be sufficient as the score just summarizes the credit history. For understanding the real problem going through the CIR is a must as by looking at it one can understand the cause/s that are pulling the credit rating low.
Once you have identified what the problem is you can then find the right solution to tackle it. Depending on what the problem is the solution could be a simple quick one or one which requires a long term and more planned approach. For something like a wrong reporting you could contact the rating agency and they will take up the matter with the concerned agency to get the problem resolved. However if you have missed a payment in the past then there is nothing that can be done except being regular in future. If the problem is high credit utilization ratio then one can work on it by controlling the spending or getting a bigger limit. Refrain from making any fresh loan applications till the credit rating improves.
Follow the above steps and pave way for a healthier credit rating. Always being careful about getting credit and then using it goes a long way in staying credit healthy, however if for some reason this has not happened the above discussion will help you.