Application Checklist for you before Taking A Loan

Personal loan is a very convenient way of borrowing money from banks and NBFCs to meet any immediate financial need. The process is extremely fast and simple provided you have all the documents required in order. Since personal loans are unsecured, banks need to ascertain the credit risk associated with the borrower before sanctioning the loan. They approve of a certain loan amount depending upon the repayment capacity of the borrower. They require you to submit proof of income and some other important documents to ascertain your eligibility for the loan.

There are some important things that one must take care of before applying for a personal loan. Here is an application checklist that will guide you if you are availing for the personal loan for the first time.

Checking the credit score

Since banks use your credit score to determine your eligibility for the loan, it is a good practice to check your score yourself first to know your chances of approval. Order your free credit report from any of the three credit rating agencies to analyse your credit standing. Having an excellent score helps in instilling confidence in the lenders and bargain for an attractive rate of interest. However, if you don’t have a very good score you can opt for personal loan without CIBIL score that are available at exorbitant interest rates.

Finding the Eligibility criteria

Different lenders take into consideration different factors to ascertain a person’s eligibility for the loan. Find out the eligibility criteria of the specific lender with whom you wish to apply for the loan. Check the parameters like age, occupation, income and credit score before proceeding with the application. Get a list of documents required so that you have all the relevant paper work when you apply for the loan.

List of required Documents

Contact your lender and get a checklist of the documents that you need to submit along with your application. The requirements of the documents vary based on the profession, income and loan requirements. However there are some common documents that you must have in handy. For an ICICI Personal loan you may require

  1. Valid Proof of identity- A copy of passport, PAN Card, Voter Id Card or driving licence serve0s as a proof.

  2. Proof of address – Copy of passport, Aadhaar card, rental agreement, utility bill, ratio card.

  3. Proof of Age

  4. Financial documents

  • For salaried employees- Bank statement for last 6 months, Salary slips of last 3 months, Form 16 for last 2 years, Employment certificate or appointment letter

  • For self-employed Individuals- Bank statements of savings and current account, proof of office address, ownership proof, Income tax returns of last 2 years, detailed financial audit including Profit and Loss statement and Balance sheet. Since the source of income of self-employed individuals is riskier than that of salaried individuals, these documents help in providing an assurance to the bank that they have a steady inflow of funds.

  1. Passport size photograph

Since personal loan is unsecured in nature, the lender verifies the documents thoroughly to make sure that the borrower has the capacity to repay the loan.

Interest rate charged

The rate of interest determines your monthly EMI on the loan. Find out the best rate that you can get. Also look at the processing fees, late payment charges, prepayment fee etc. It is important to have a clear understanding of these charges before you apply for the loan.

Repayment plan

Use the EMI calculator to plan your repayment in advance and choose a tenure that suits your budget. Take into consideration any major changes in your income or expenses that you expect in near future. Being realistic helps in avoiding any future defaults on loan that may adversely affect your CIBIL score.

Taking care of this essential checklist will ensure that you get approved for a personal loan at good terms and rate of interest.

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Mastering the 5 Rules of Good Credit Health

A credit score is a key factor that is considered by lenders before approving any kind of loan. Even interest rates are also based on the credit health of the individual. So if you aim to achieve a perfect score you must master the 5 rules of good credit health.

Always pay your EMIs and credit card bills on time

Lenders essentially check your credit score to analyse your likelihood of paying back the debts. A good payment history is the key to establishing a good credit score. A responsible and reliable behaviour boosts your credit health. A single missed payment can cause a drop of a hundred points in your credit score. Defaults that are more than 90 days late are the ones that affect the credit score the most. So always pay your bills on time. It is always better to set payment reminders or enrol in automatic payments. Make sure you pay at least the minimum amount on the credit card bill even if you face a cash crunch in a particular month. All late payment records make their way to the credit report and affect your credibility in the eyes of the lender. In case you accidentally missed a payment you can call your lender to explain the situation. He may agree not to report the information to the bureau if you pay the bill and bring your account current.

Keep your credit utilization levels low

The amount of debt that you owe as compared to the overall credit limit determines your credit utilization ratio. Experts recommend that one must keep the utilization levels to below 30% in order to improve CIBIL score. The easiest way to ensure this is to pay off the entire outstanding balance at the end of each month to free up the credit limit. But sometimes the ratio is calculated using the balance outstanding at the time the bill is generated. If one charges too many expenses to the card, the credit utilization ratio may be high even though the entire bill amount is paid. In such a case it is wise to make payments twice a month.

Some other ways of improving the ratio is to request the card issuer for a credit limit increase. One can also open another card and keep low balance on it. This will increase the total credit limit available for use and improve one’s credit utilization ratio.

Monitor your credit reports

Your credit report is a record of how you handle all your debts and serves as a basis for credit score calculation. Inaccurate recording of information by the bureau or identity theft cases can negatively affect your credit health. Check your credit report from all the major credit reporting agencies regularly to ensure that the information recorded there is correct. If you find any errors in the report you must get it rectified by raising a dispute with the bureau. The bureau usually takes 30 days to investigate the issue and update the credit report.

Be strategic about taking new debts and closing old accounts

Credit scoring models take into consideration new enquiries for CIBIL score calculations. Applying for too many debts in a small period of time will result in a lot of hard enquiries and affect your credit health negatively. It raises a red flag for the lenders signalling that you may be a desperate borrower who may not have the ability to repay the loan back on time. So do not apply for too many loans or credit cards at the same time. It is better to spread your applications over a few months.

Do not close your old accounts as the length of the credit history plays a significant role in establishing your credit health. Having an available credit limit on unused old credit cards helps in keeping credit utilization levels low. Also if you have a good payment track record on an old account, it is good to keep it open so that it affects your score positively.

Consider credit mix

Scoring models also consider the type of credit that a person takes on. A good credit mix of both revolving as well as instalment accounts helps in establishing a good credit rating. So if you show that you can responsibly handle repayments of different types of financing tools like credit cards as well as personal loans it will be good for your score.

Mastering these 5 mantras is the recipe for a good credit score.

Reality about Credit Score No one will Tell You

Having a good credit score is no longer an option these days. It is necessary to have a good rating as it determines your creditworthiness and your eligibility for the loan. No bank or NBFC sanctions a loan without checking your credit score. The approval decision, amount of loan and rate of interest at which the loan is disbursed, everything is based on the credit rating of the individual. Let’s look at some important credit score facts that one must be aware of in order to maintain a good score.

Do we have more than one credit score?

There are many credit bureaus in India that receive information from the member banks and financial institutions regarding the borrower’s credit behaviour. These are Experian, CIBIL, Equifax and CRIF High Mark. Each bureau may receive updated information at different point in time, hence the information in their credit reports may vary. The scoring model that the bureaus use to arrive at the score also differs. Hence the score that you get from each of these bureaus may differ slightly.

What does a credit rating of 0 imply?

A credit score of 0 implies that one does not have any credit history till now. The credit bureaus that maintain the record of people’s credit behaviour haven’t received any information about your credit behaviour from the member banks, NBFCs or private lenders. By using a credit card or by taking a loan one can start building a credit history. When you charge your expenses on the card, and make timely payment of bill at the end of the month, the payment behaviour gets recorded on the credit report. Similarly payment patterns of EMIs on loan are also reported by the banks. The information on the credit report forms a basis for calculation of CIBIL Score.

What things one must take care to prevent the CIBIL score from falling?

Make all the payments in a timely manner. Any default or late payment reduces your score by a few points. It is a good habit to pay the entire credit card bill and not roll over your balance to the next month. Paying only the minimum balance helps one avoid the late payment fees, but doing so will not free up your credit limit for next month’s expenses. A high credit utilization level has a big negative impact on your CIBIL score.

Will a poor score haunt you forever?

A credit score is just a snapshot of your financial situation that your credit report shows at a particular point in time. When new information gets added to your report, the score will change too. If you have a low score because of your past credit mistakes, it does not mean that you are doomed forever. With consistent good credit behaviour you can get your credit profile back into shape. Pay attention to the factors that help in improving your score and you can improve your credit

Will becoming a guarantor or a co-signer prove risky for your score?

If you help a friend in getting a loan by becoming a guarantor or a co-signer then you put your credit history at risk. Make such commitments only if you are sure of the other person’s repaying capacity. If the borrower does not make timely payments you will be responsible to clear the debt. The loan will be considered your liability. If you fail to make payments on behalf of the borrower then your credit score will take a hit.

Checking your own score will not affect your score negatively

When you order your credit report from any of the bureaus it is considered as a soft inquiry and it does not affect your credit score at all, no matter how many times you check. In fact one must check the credit score regularly. It not only gives one an understanding of one’s credit standing but also helps in uncovering mistakes or errors on the part of the bureaus. However if a lender or a card issuer checks your score to base their approval decisions, it is considered as a hard enquiry and may impact your score for a short term by a few points.

Good Credit Score – Way to Secure Financial Future

There are three basic necessity of human being. Food, Shelter, and Clothing. Now all of these do not come automatically. One has to earn, and save and crack the best deal. Food and clothing is still not as expensive as the shelter is! So one does not have to consider that cost to a huge level! But Shelter… Most expensive of all the basic needs. In earlier times, people have spent the whole life saving for the money and buying a home. But nowadays it has become easy. The easier is because one can take a loan. So the dream can be achieved a decade or two decades earlier than seen!

Nimesh Wanted to take HDFC Home Loan and shift to a two bedroom house with his wife and twin kids. He had a house in his native where his parents stayed. He was an urban responsible husband and a father who wanted to stay in the city, work and provide education to his kids. Nimesh was always a responsible payer. Taxes, electricity bills, credit card bills, maintenance, nothing was ever delayed even for a day. Even when he started to pay off his education loan he had taken for his MBA, he paid all in time! And because he was a responsible payer, he got many privileges!

The first one was a good Credit Score! This is by default. Many people take the stress of maintaining a good credit score. But if the payment of all the credits have always been made on time and the report is checked regularly, the score will never be on toss! Also, with the credit score, the banks and the NBFCs check the generosity of the party applying. Past payments, why the loan is required, if the applicant will be able to repay the loan etc. And Nimesh was lucky for all of these points and the loan approval didn’t take him to many banks and multiple application but happened in one go and that too at earliest.

Now one may think that what is the correlation of good credit score and financial security. Well, for the example mentioned above, the financial future does not necessarily mean the savings or the investment in equity or mutual funds or bonds or insurance which an individual makes. But, it about how efficiently the funds are distributed! A good score is the reflection of the responsible payer of the debts. One may want to invest in multiple asset class and for that, they may want the funds from the banks and they would not want to either a. Liquidize the funds they have. b. they do not have enough funds currently. In any of the case when the applicant tries to ask the credit from a bank, the first work bank is going to do is ask for the check for the credit score! May it be a home loan like HDFC home loan or personal loan or business loan what one wants to apply for in order to make an investment which is going to lead them to a better secured financial future, score is very important as the approval of the credits is based on the score when applied for in banks or the NBFCs.

In the end, let’s get a brief of the score. It is made up of five parameters. Payment History, Amount Owed, Credit Mix, New Credits and Length of credit history. Various credit bureaus have different algorithms to calculate the score and they provide a score and report to each individual depending on those factors and it’s calculation. As explained earlier that if taken care from the initial stage, a good credit score which is 750+ to 900 is no big deal to be achieved.

10 Credit Hacks to Improve Your CIBIL Score

There was a time when people borrowed funds only in case of emergencies. They used to earn first and then think of fulfilling the desires, needs and wants of life. Today’s generation knows how to work harder, but just cannot wait till the time they earn sufficient money that is needed to get what they want to. Banks, financial institutions and other private lenders are here to fulfil the dreams of this new generation. But they are not angels, who will just give them the money and forget about it. They are in a business, and they want returns of their investment. That is why before lending money, they make sure that the borrower has sufficient repayment capacity as well as the intention to pay back the money with interest. For this they check the CIBIL score of an individual.

So if you wish to borrow funds anytime in your life, you must pay close attention to your score. If you find things out of control, you must take steps to increase CIBIL score. Here are 10 credit hacks to improve CIBIL score.

  1. Check your credit reports– The first thing that you need to check is whether there are any errors in the report. A low CIBIL score may be the result of mistakes on the part of the bureau which are not uncommon these days. Even though everything is digitized, errors do occur and become the reason for a low score. If the report reflects accurate information, then you need to identify areas where you need to focus your energies on to improve your score. Are you having too many loan accounts? Are your payments getting delayed? Is your outstanding balance on credit cards high? Looking at these factors will help you identify the road that you need to follow to reach your goal.

  1. Clear past due payment- Payments that are more than 90 days past due bring down your score drastically. Clear your past due payments, and start making all the future payments on time. An on time payment track record gives a boost to your score.

  1. Make a budget and stick to it- Having a credit card does not mean that you can spend as much as the credit limit allows. One needs to make a realistic budget and spend only what one can repay at the end of the month. Carrying huge balances on the credit card month after month will lead you in a debt trap.

 

  1. Credit utilization rate- The percentage of the credit limit that you utilize significantly affects the credit score. Maxing out the credit cards bring your score down. If you pay off your credit card balances it will reduce the utilization levels and help in improving CIBIL score.

 

  1. Pay the credit card bill twice in a month- If you use your credit card as a convenient means of paying for most of your expenses, it is possible that you reach the card limit when the bill is generated. Even if you pay the full balance when the card statement arrives, you may still have a low score, as the balance that is sent to the bureau for utilization calculation may be the statement balance. By making two payments in a month we can keep a check on the utilization levels.

 

  1. Take a personal loan to consolidate credit card debt- The credit card debt is the most expensive form of borrowing. If you have outstanding balances on multiple cards, it is advisable to take a personal loan to pay off all these debts. It will help you save money as personal loan is available at a comparatively low rate of interest. Moreover, the credit utilization levels decrease and help in improving the score.

 

  1. Raise in the credit limit- Check with your card issuer if you are eligible for a credit line increase. A rise in the credit limit also helps in decreasing utilization levels and increases your credit score.

 

  1. Negotiate with creditors- One can try if negative items can be removed from the credit report by talking to the creditors directly. Sometimes they agree to remove the entries out of goodwill. Find out if you can reach an arrangement with them wherein you pay the balance in exchange of the entry getting deleted.

 

  1. Keep old accounts open- Old and active accounts help in increasing the length of the credit history that has a positive effect on the credit score.

 

  1. Display good credit behaviour- One can take a loan with bad CIBIL score and make the payments on time to display good credit behaviour. This will help in building a good credit score.

 

How To Update Your CIBIL Score Online

By now it is evident that what is the importance of your credit score and credit report. There are four bureaus in India, viz. CIBIL (Credit Information Bureau India Limited), Experian, Equifax, CRIF HighMark. These are the four bureaus that offer credit report and score of any individual. Now as well know that score is made up of 5 parameters: payment history, an amount owed, new credit accounts, account length and the mix of credits; different bureaus have different algorithms to check an individual’s score. A report, however, is the detailed information of how the score is made, and various transactions associated with an individual.

As CIBIL was the first bureau that was established in India in association with TransUnion, many people may consider credit score as CIBIL score and credit report as CIBIL Report. The score ranges from 300 to 900, where 300 is considered the lowest and 900 is considered highest. Any score that is 750 or above is a good credit score. The benefit of having a 750 or more score is getting the loan or the credit application approved easily with better interest rates. A score ranging from 600 to 750 is average and would take more efforts in getting loans and credits approved but with a higher rate of interest on them. And for anyone with a score below 600, it is nearly impossible to attain any credit. When the score is low, the most priority is to to get it to 750 level. Also, these days, a score is not just a measure of getting a loan and interest rate easily but it is a credibility score for many places. It is checked for jobs, visa applications, important study locations. Your score shows your responsibility towards the finances and how efficient are you in handling them!

So when you are planning to increase your CIBIL score, what would you do? As the parameters are explained, you have to work closely towards all the factors. First of all, start repaying all the debts and clear the old mess. Also, take a close look at the report. At times, it may happen that the transactions that make your score low, are not made by you. So, there is either fraud or identity theft that has happened with your account or using your information or some of the details are wrongly updated. What to do in such case? CIBIL has a dispute raising method online.

Go to the website and raise a dispute with the bureau. They would check the application and verify the error. Once it is they cross verify and check the issues, you score would be updated and unwanted data will be removed from the report.

This is the case when a dispute is to be raised, but what if one wants to update the cibil score online? Well, when you make any credit or related transaction, the information within a few weeks is passed to the bureaus. For example, you have applied for a car loan and a bank is processing it. So, first of all, it is reflected in the report as the hard inquiry. Once the loan is approved and the transaction starts, with all the EMIS which you pay including the down payment, the information is updated in the report. The banks and the NBFCs have to pass this information to the bureaus. Sometimes it may happen that some information is not updated in a particular report of the bureau, but do not feel hesitant to connect to the bureau and send an application to update that particular update which is missed. Banks at a time may miss passing the information.

So, there is no specific method to be followed when the score is to update in the report over the internet in normal norms, but yes, while dispute; do not waste time. Make sure you fill the form and raise it online as soon as you can.

Having a Good Credit Score can be a Money Saver. Read How?

If you were posed with the question that why should you have a good credit score, then the most common answer would be to get a loan application sanctioned. Well, that is true and is indeed often the primary and most common use of a good credit score. However what if this good rating can help you in other aspects also. One added use of a good credit score is in securing a job; apart from that a healthy rating can help you save money too. If you are wondering how, then the following discussing is for you.

How Can a Good Credit Score Help Save Money?

A good score is important, that is something which most of us may be aware, but how it can be a money saver? Here we discuss a few ways in which it can help you save money.

  • Helps Save Interest Cost: Lender charge interest on loan for two reasons; first for allowing you to use money that does not belong to you and second for the risk that they undertake when lending. As we know higher the risk higher the interest at which the loan will be available to you. Thus if you have a good score you can approach the lender who offers most competitive rates as you are sure of getting your loan application approved provided you comply with rest of the requirements laid down by the lender. A good score also prompt the lender you a loan at lower rates because they would be assured of getting the money back. So whether it’s personal loan interest rate or home loan interest rate, even a change of half a percent could help you save huge amounts. Obviously actual saving would depend on the quantum of loan, but a drop in rate however small is welcome.

  • Gives You Bargaining Power: Another way a good score can help you is by giving you a bargaining power to negotiate favorable terms with lenders. This means you can get a concession or waiver on various additional charges like the legal fee or the processing fee and you could also get favorable terms on pre-payment charges. All this could help you save money on your loans.

  • Could Help you Land a Job: This is not as much save money as earn it. Lots of organizations are seeking credit reports of applicants before hiring them. So if you do not have a good CIBIL Score you could end up losing a job opportunity despite having the right qualifications and skills for it. Not getting the job you deserve or have the qualifications for because of poor rating could make you lose lot of money in terms of remuneration.

  • Lets you Access Funds When you Need Them. There might be times when you might want to get a loan sanctioned at a short notice. This may be due to some emergency for which you need funds or because there is a window of opportunity like a deal on a car that you want to buy. Not being able to get funds on time could mean that you could end up losing that special offer which means you lose money when you buy it without the offer. It could also mean that you have to borrow at higher rates to deal with the emergency or break your investments,

So as we said earlier a good score is your ticket not only to getting loans sanctioned but it also lets you save money in various ways. Thus being credit healthy at all times became all the more important.

Why You Should Keep Your Credit Utilization ratio within 30-40%

Since years we have been listening to the saying, that spends only that much, how much you can earn. However, over the past few years, he thought has been changing. With credit cards coming into the picture and the availability of them have made it easier for many people to spend even when they do not have that much cash on hand for that moment. Credit cards have made it easier for people to access money when in urgent need. But, there are few asterisks (*) that comes with whatever we peruse. And when it is a credit card, the credit utilization holds the biggest asterisks. Even though the card has a given limit, it is never a good practice to use all of it!

With credit cards comes the credit utilization ration. But that? And what it? Let’s understand this with an example. Suppose the credit limit of a particular card owned by someone is 1,00,000 Rs; then it is advisable to use 30% to 40% I.e. 30,000 to 40,000 Rs max. Credit utilization is basically the amount that is spent on the total credit that is available to an individual of their card. And, the credit utilization ratio is the amount used divided by the total available credit limit. Now, the next question that arises is: why to maintain the ration? When the limit available is more, then why not use more.

A credit score is an answer to that. With many criteria that have their effects on credit score, this one also plays a role. The reason behind is, more the usage, more the debt. More the debt, more it seems that the person is in need of credit. And more the need of credit shows more debt burden. So its a huge chain of logic that have been eventually considered after studying many of the cases. The irony is if you have more than one cards, and collectively if you spend, and exceeds the total limit, 40% would still be okay. So, taking the above example, if there is one more card of the same limit, 1,00,000. and if one uses, 35,000 each card, i.e. 70,000 in total then it is okay. As the total credit limit available is 2,00,000. But, using 70,000 from single card shows credit hungry behavior. Of course, this does not mean that one should keep applying for the cards and use it. Everyone should always check the amount which they would be able to repay if spent before then paying.

Credit score a tricky concept. But easy to understand. More the usage of the credit card will imply that the cash in hand is unavailable. When the credit card is given, an individual’s salary or bank account is checked if they are either salaried or self-employed respectively and only then the card is offered or approved. But many, misuse it. And hence the credit bureaus check the credit utilization ratio. What to do if the usage is more and the limit available is less? Simple, as mentioned earlier, apply for one more card. But, one should not apply for too many cards. Even that states that it is a credit hungry behavior and one is in bad need of funds. Similarly, closing the older credit cards also would impact the score as the older accounts shows the credit behavior one has over these years. And account history is also one of the factors which comprise the credit score. Also, if one does not want to apply for new cards, they can always make the payment more than once a month. When the usage seems to exceed 30%, make a payment and revive the credit limit!

The moral to all this is, anything used on average is good. May it be the credit that is available! Using 30% to 40% of the total limit available over the credit card shows a responsible behavior. And that also maintains the score!

Use Secured credit card to Repair CIBIL score

If you have recently ordered your CIBIL report and found that you have a low CIBIL score, it is time to take charge of the situation and work towards improving it. Banks and financial institutions avoid issuing credit cards or lending money to individuals with a bad credit history. They pay a lot of attention to a person’s credit worthiness to avoid any risk of defaults. So a good CIBIL score plays a crucial role in the lending approval process. Many banks have cut off limit of a score of 650 -700 below which they reject the loan application.

In order to repair CIBIL score, one needs to prove that one can handle credit responsibly. For this one needs to make timely payments of loan instalments or credit card bills every month. But with a low CIBIL score, it would be hard to find a bank that trusts you with its money, or is ready to take the risk of lending to a person with a bad credit record. At such difficult times Secured credit card is a way out of this vicious cycle.

A secured credit card, works like any other card offered by numerous banks. The only difference here is that it requires one to keep a fixed deposit with the bank. The deposit amount then determines the credit limit that the bank offers on the card. So essentially, the bank does not face any risk of default. If the card owner does not pay his credit card bills, the deposit amount kept safe with the bank can be used to recover the amount.

Let’s look at some more features of a secured credit card

  1. Usually you do not earn any interest on the fixed deposit amount. You cannot close the FD till the time you are holding the secured card. Foreclosure of FD leads to cancellation of the card along with payment of applicable fees. After a year or two of responsible payment patterns, one can request a conversion of secured credit card to a normal card.

  1. There is very little documentation required to get a secured credit card. Generally all you need is an ID proof.
  1. The difference between a secured credit card and a debit card is that the secured card activities are reported to the bureau.

How does using a secured credit card repairs CIBIL score.

Timely payment of card bills is the most important prerequisite that is needed to build your credit score, through this process. The bank reports the payment behaviour to all the three credit bureaus. The payment details get recorded in your credit report and that forms a basis of your score. Since the payment history makes up 35% of your score, working on this aspect definitely gives a big boost to your score.

Remember, not using a secured credit card responsibly can bring down the score even further. So make sure you do not make any late payments, and do not default on them either. Do not use more than 30% of the available credit limit. A high credit utilization ratio pulls the score further down.

A secured credit card is a good option not only for people with a low credit score but also those whohave just started their journey of building credit. People with a lower monthly income, than the minimum income set by bank for issuing credit card can also use a secured card. Various banks like HDFC, Axis Bank, ICICI Bank, Dena Bank provide this facility. These banks allow a credit limit of 50% to 100% of the fixed deposit amount. But before you apply to any one of these banks for a secured credit card, remember to set your expectations right. You will not see overnight results. Just like all efforts take time to yield results, building a score also requires patience. It may take a few months before you start seeing any results. So you need patience and determination to start your journey. All the best !

How fast can my credit score increase

We are in an ear where everything that we want is instant. Instant is good. But it creates a lot of anxiety, impulse, and impatience. Everything instant is not good. Despite getting the results too soon, it’s always not necessarily perfect. There are many instances where the perfection or accuracy is not maintained at the speed of achieving it. While speaking over credit score and it’s rate of increasing or decreasing often has many myths. Let’s get those busted. There is no magic that can happen and would get your score to optimum great over a day or month. Also, the speed of increase also depends on the score which is currently. If the score is 450 and if the score is 650, definitely the time required to get 750 which is considered optimum best, differs. The one which has 650 will take lesser time compared to the one which has 450.

A CIBIL Score is a three digit number which is determined by payment history, the amount owed, new credits, credit mix and length of credits. Where, 35% is comprised of payment history which means how one has been making payments over the tenure of credit accounts opened. Credit consists of the credit card usage and the loans taken. 30% is for the amount owed. The total amount that has been taken, I.e. the credit limit one has for the credit card and the loan amount taken also has a major role in making the credit score. Length of credit history is 15%. How long have been the credit accounts are open, is the factor that is also considered. Rest both, new credits, credit mix are given 10% each. New credits are the one which is applied. But, if there are multiple attempts for opening new credit accounts can drag the score down. As it makes the creditors think that one is in dire need of funds which is also called credit hungry behavior. Credit mix is the combination of a secured and unsecured type of credit along with the fixed and revolving type of credits. These are the parameters and the weightage of them.

Now, on individual history, these scores are made. Any mistakes in these parameters will mess up with the score. The details information is mentioned in the CIBIL report. How long have been the account open, how and when are the payments made, any defaults, missed or delayed payments are all mentioned in the report. Also, the inquiries made for applying the credit are also mentioned. The first score is established after 6 months of an active account. Then the score is updated almost every month. Credit utilization is also a factor which affects the score. This is specifically for credit cards. One should not use more than 35% – 40% of the total credit limit of the card one has. To increase the score, the first and the foremost thing which has to be done is rectifying the old mistakes. There may be any missed payments, default accounts, unpaid dues, etc. work on them. Talk to the banker, tell the issues you had. Try clearing all those first. Then, use your credit card upto 35% of its limit. If your usage is more, apply for a new card. And use the mix. As you apply for a new card, new credit factor is also considered. But yes, do not overdo! Try taking a secured loan, say a gold loan or secured credit card. This will be a good of credit mix as well.

Once this is achieved, make sure you do not miss any more payments or delay in payments. Organize the payments. Keep reminders. Do not miss the repayment dates. While you follow this practice for over few months, a good credit score is no far! Again, there can’t be any finite time that is calculated to get a 750 score, but it is always achievable if the above mentioned points are taken care of!