Credit Repair Guidelines for Better Results

11-Aug-2017 written by : FSI-Team

A good credit score is a gateway to your good financial future. However it is sad that many people do not pay attention to their credit scores until they need a loan. By paying attention to your credit rating from the beginning, you could stay credit ready always. Neither would your score tumble down ever nor would you require guidelines to repair the credit report.

Nevertheless let's find out certain tips to improve credit score and get better results in a record time.

For robust credit health it is important that you understand the basics first. You need to know what builds your score and what hurts it. For, in the backdrop it is your financial moves that determine health of your credit report.

There are five factors that primarily determine your credit score.

  1. One of the most important factors that boost your cibil score is certainly the repayment history. The regular repayment of EMIs and credit bills enhances your score by 35 percent. So by ensuring the timely repayments, you take a large step towards a good score.
  2. After repayments, the amount of credit being used affects your score. The percentage of loans raised against the sanctioned limit is called credit utilization ratio. If you use adequate credit utilization ratio, that is 30% or less of the permitted limit, you would boost your score by 30 %.
  3. Next is the age of your credit history helps your score by 15 %. That also means, if you maintain good credit history for years it would also be counted in your favor. However, a single skipped payment or late payment ruins this good history. So you need to ensure the good history every time.
  4. If you raise too many new loans or credit cards simultaneously it can hurt your score by 10 % and you are considered as a credit hungry prospect. This also increases chances for loan rejection. For example if you want to buy a home loan in the future, you should start planning for it many months before. Each loan or card application should be made keeping in view the future loan.
  5. If you use right credit mix of secured and unsecured loans you would help your score by 10%.

Paying attention to these factors your credit score would always stay hale and hearty.

Repairing credit score

Now, in order to improve bad score, pull out your free credit report from the CIBIL.

Study the report and find out if there is any misinformation or error on the report. As you find an error in the report, dispute the error with CIBIL. You can either dispute it online or send a snail mail for the same. Sometimes a simple error such as showing status of a closed account as open account can drastically hurt your report.

As the error is corrected your score would jump to a better place. Next you can ask the creditors to erase a disputed account altogether from your CIBIL report. You can make a settlement and change the status of bad debt.

As discussed above, percentage of credit limit being used affects the score badly. Sometimes the credit limit on the report is lower than the current, you need to get it corrected as soon possible.

If however your credit utilization is more you can consider applying for a couple of credit cards. With good history of repayments adding two cards would help you raise the limit and you could successfully maintain the credit health.

In case you have too many cards, you can choose to close certain high cost cards. Herein you should be careful enough to not close an old credit card with good history.

The purpose of all the financial moves should be to enhance the score. By raising the score, you would also raise your worth. It would not be easy to get loans for bad credit score with broken credit score. You can consider applying for a secured credit card or secured personal loan. With right mix of credit accounts, your creditability as a borrower would rise.

As you successfully repay the loans for next few months you would build a good history. It would enhance the score and would make you ready for bigger loans. Soon you may be ready for a home loan!



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