Why you should change or lose a few habits to improve creditworthiness?

Banks are always in the urge of giving out loans to people. The more loans they give out, the more they can earn through interests. On the other side of the game, we consumers are always in need to some loan or the other. There are needs and wants of ours which can only be fulfilled through getting a loan, needs like medical emergencies and maybe wants like buying a luxury car or purchasing a house. If taking a loan is that important, what are the criteria’s which are important to avail any loan.

Your total experience, the company in currently work in, your salary, your existing lines of credit and many more are the criteria’s which you need to adhere when it comes to availing a loan. The most important of all, which determines if you can have a loan with ease, is the credit worthiness. How do you know if you are credit worthy? When you apply for a loan, the banks with other verifications conduct credit verification and check your cibil score. A credit score is a number which represents how you are doing financially.

There are lots of things which add up to your cibil score. Sometimes the credit score is perfect for a loan or a financial product to avail and sometimes you have to work hard to improve cibil score. Improving your bad credit score is a very long way to go and also you will have to look after not to fumble on your way.

Here are some tips on do’s and don’ts to get your score up,

Don’ts

Late payments

This is the most basic practice you can do when it comes to getting your credit score up. Understand your finances and adhere to due dates of your existing line of credit and loans.

Do not carry big balances

Keep your credit utilizations low, let’s take a number here. If you have a credit card with a limit of 1, 00,000 rupees, make sure you only use 40% of it. This will not only keep a cap on spends, but will also help you get your score up.

Defaulting

Do not default any loan and get it to a non-performing account. A non-performing account will not only hamper your cibil score, but will stick to your credit report for a very long time and will make it difficult to get a loan.

 

Do’s

Check your credit file frequently

If you are one individual who has multiple loans and credit lines on your name, you must check your credit score frequently. Sometimes, the credit bureaus make mistakes on your report and you are the one who tends to pay the price for their mistakes.

Create a healthy relationship with your bank

Your banks are the one who send reports to the bureaus on a frequent basis which adds up to your credit score. if you happen to skip a payment or two, you can explain your situation to the banks and they can on their discretion give you time to make the payment to avoid the loan defaulter list. Not only credit wise they can also help you with speedy loan process, if you are in need to one.

Use variety of credit lines

If there are multiple credit lines towards your account, here are high chances to get your credit score up in no time. More the credit lines and loans, more you will be looked as credit worthy and the one who takes their financial seriously. Just do not default any payments as this can work vice versa.

Just by improving basic financial habits, you can help your credit score grow in a positive way. Simple financial integrity can help you in many ways you can imagine.

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