Your credit score is a representation of your financial health, which is what makes it important enough for you and sit up and pay attention. With a healthy score, you can look forward to a healthier financial life as well, and avail the best offers on loans and credit cards. Otherwise, getting a loan for low CIBIL score can be quite a challenge!
If your credit score is currently not up to the mark, do not fret. We’re here to help you improve your score from ‘bad’ to ‘good’. These six easy hacks should get you started. Read on to know more.
Tips and tricks to work on your credit score
Make timely payments: First things first, pay your bills on time each month as they arrive. There’s nothing like bills paid in full to make a prospective lender look at you positively. Payments when made on time and ideally in full, look great on your CIBIL report as well. Paying up late or less than the total amount due also impacts your score negatively, so do keep that in mind!
If you find it tough to keep track of which bill needs to be paid out when, how about setting up calendar reminders or alerts on your mobile phone? And yes, if you have any previous bills outstanding, consider paying those off as well.
Don’t apply for too much credit: While your wallet may look impressive when it is spilling over with multiple credit cards, what isn’t so impressive is the impact this has on your credit score. The reason being, each time you apply for a new credit limit, the lender makes an enquiry about your credit score. Each such hard enquiry can negatively impact the score. It’s pretty clear, then – don’t make applications unless you really require that additional card or loan.
Stay well within your credit limit: While larger credit limits are tempting, remember it’s also that much easier to utilise them. The trick to staying credit healthy includes staying well within your credit limit. Using around 30 percent of your credit limit or less is ideal, by the way, for your score to get a boost. On the other end of the spectrum is the danger of maxing out your card limit, so do track what you spend! The lower the balance, that much better is your credit score. In short, know what you are spending before the ratios get skewed.
Track your score: It’s no secret that monitoring your credit score is one of the best things to do to bring your score up. Let’s see what all this does for you, shall we? For starters, you’ll be able to know how you’re faring when it comes to credit usage. Experts recommend that you check your score once a year, but there’s no such rule set in stone. In fact, it’s recommended to check your score more often, especially if you’re planning to apply for a housing or car loan. Secondly, you’d know immediately if there is any inaccuracy in the report. Which brings us to the next point; read on!
Report any inaccuracies on your report: This is where monitoring your report comes in, and is an important activity. There have been instances wherein an individual’s credit report reflects information pertaining to someone else – which can impact the credit score negatively. To cite an example, if a person has a poor repayment track record and the same reflects erroneously on your CIBIL report, rest assured that this information will pull your score down. Make sure, then, that your report contains only your data and no one else’s.
Don’t erase past records: It doesn’t matter if you’re not using the credit card that you’ve had for a while. As long as your payment history on that card is good, with payments made on time and in full, your credit card can help boost your score. It’s pretty simple – when a lender is looking at your credit history, they are encouraged to see a prospective borrower who comes with a robust financial history. Having this backing only makes your subsequent applications for loans and/ or credit cards stronger.
Establishing and maintaining a good credit score will always be to your advantage. A few good practices like those mentioned above can ensure that you’re not stuck trying to get a loan for low CIBIL score. Instead, you can avail of the best deals when your score is healthy.
Remember that repairing your credit score is not an overnight task. Taking it from ‘bad’ to ‘good’ needs time and patience. Your best bet to go about it, is to establish good credit habits. Be practical in your approach and over time, you should see the results of your hard work pay off.