31-Jan-2017 written by : FSI-Team
In recent times, you may have heard or seen a lot of information being circulated about credit score and credit health. It is true that lending institutions and the regulators want you to be aware of your credit health and try to improve your CIBIL score. If you haven't paid serious attention to such messages, dismissing it as the agenda of lenders, you could not be farther away from the truth.
In the present-day context, your credit health plays a very important role in your life as there is hardly anybody who has not availed of a credit line or two. Even if you have not done so yet, the possibility of you not taking any line of credit in the future is almost impossible.
The Reserve Bank of India, the central banking authority of India has now made it mandatory for all lenders to refer to the credit score of an individual as a part of the credit assessment process. This means if you do not have a satisfactory CIBIL score of at least 750 (out of 900) it is likely that your loan or credit card application may get rejected before consideration. So, if you haven't bothered about your credit health so far, here are a few good reasons to take control of the same in the new year:
Good chances of credit approval- Nobody wants to face rejection at any point of time in life and being rejected for a credit line can be devastating. Therefore, it is important to maintain a good CIBIL score to eliminate the possibilities of rejection when you are in dire need of credit.
Higher limit of credit-When you are negotiating terms and conditions for a home loan to purchase the property you have set your heart on, the only thing on your mind is the limit of credit that the bank will approve. If you have a high score, chances are that you will be able to negotiate a higher a credit limit. A good CIBIL score gives you higher negotiation power.
Lower rate of interest- Any borrower opting for a line of credit wants to pay the least amount of interest possible, but more often than not it depends upon the macroeconomic situation. However, if you have managed to maintain a stellar credit score, there is a good chance of your loan getting approved at the lower end of the band of interest as proposed by the lender. Similarly, you may end up getting a better deal on your credit card sans the annual fee.
Hoping that you are convinced by now to build and maintain a good credit score, here are some tips to improve CIBIL score quickly:
Scan your CIBIL report thoroughly- First up, run a thorough CIBIL score check. If you haven't checked your CIBIL score even once up until now, do so immediately. Look up how to check CIBIL score and follow the simple instructions as provided on the website of CIBIL, India’s premiere credit bureau.
Check for errors and discrepancies- A CIBIL score check should reveal if any kind of errors or discrepancies by way of your identification or loan details are present in your CIBIL report. If you find any errors at all, do not waste any time in filing a CIBIL dispute that will help you rectify the errors on your credit report at the earliest.
Timely repayments- If all is well with your credit report and you would still like to improve your CIBIL score, check if you are making timely repayments on all the credit lines that you have availed of. Resolve to make credit card payments in full on or before each billing cycle. Automate your payments on all other lines of credit, if you have not done so already. Your repayment track record has the largest influence on your CIBIL score, so make sure that you do not falter there.
Keep a check on credit usage- Another important factor that has an influence on your CIBIL score is credit utilisation. Simply put, credit utilisation is the amount of credit you use as against the total credit made available to you. To maintain a good score, ensure that that your credit utilisation does not exceed 30% at any given time.
Keep a hawk eye on your credit health- Lastly, but not the least, inculcate the habit of checking your credit report at least twice annually. This will ensure that no errors or discrepancies creep you're your credit report. Although you cannot check CIBIL score online for free every time you want, with effect 1 Jan 20717, you can obtain your free credit report from any of the four bureaus once in a year. For more checks you would be required to pay a nominal amount to check your CIBIL rating.
Just as you take care of your physical health, your credit health is of utmost importance in today’s context. If you haven’t taken charge of your credit health yet, now is a good time to begin!