The better your CIBIL score, the higher your chances of getting a new loan easily.
A credit score is one of the most important parameters to judge the financial health of an individual. It is one of the primary criteria that banks and other lending agencies ascertain before approving and disbursing you a credit card or loan.
In India, the financial health of an individual is determined by their CIBIL score. It is basically your scorecard on how well you manage your earnings and liabilities. The better your CIBIL score, the better your chances of getting a new loan easily.
A higher CIBIL score may also help you get a lower rate of interest, as you may even apply for a loan with PSU banks. There are a number of ways to improve your credit score. All it takes is your time and religious efforts. Here is a quick guide to achieve a good credit score.
Check credit report
Checking your credit report is an important aspect of improving your credit score. It will help you identify errors in your report. In the event that your report contains mistakes, you must get them fixed as soon as possible.
Outstanding bills lower your credit score hugely. It is advisable to pay off any outstanding amounts on credit cards or EMIs so that it does not reflect in your CIBIL statement. Delayed payments lowers the credit score while timely payments get the same at the higher side.
If you are a new borrower and do not have a CIBIL score yet, you should consider securing 1-2 consumer loans that are usually for a tenure of 12-18 months. Make sure to make all EMI payments on a timely basis. This will certainly help you secure a great credit score and you may easily apply for larger ticket size loans.
Deal with delinquencies
You must settle your old accounts having a negative history. This may not reflect on the score immediately but would benefit gradually in the long run. Seek for a smaller ticket size loan from an NBFC and maintain a healthy paying pattern. This will improve your CIBIL score over a period of time.
Pay credit card bills in full
Paying the minimum amount due on your credit card bill might not hamper your CIBIL score, but it will certainly impact the bank’s willingness to lend you a loan, as it questions your repayment capabilities. It is best advisable to pay the credit card bills in full.
The bottom line is that you should work towards improving your credit score if you are planning for a major purchase, like a new car or home. Once you start taking steps to improve your score, you might not see a noticeable improvement for several weeks or months, but it will gradually have a positive impact on your credit score.