What error  you  can  avoid while  building a credit score

A good credit score can be the ultimate key you can hold to unlock the best financial opportunities in life. Not only a good credit score can help you with various loans and credit cards, it can also help you land on your dream job. It can act like a boost when your future landlord conducts background verification on you. A good credit score can help you in many ways you cannot imagine.

What many of us do not know is that, building a credit score is equally hard as maintain the score. Unfortunately for many people who were starting on this epic credit journey a decade ago had no idea on how to start and how to dodge the blind spots when it comes to credit scores. Fortunately, today you have all the information you need at your finger tips when it comes to starting your journey to build a good cibil score. You have different websites as well, which helps you with free cibil score check to make better credit decisions. With all the information you need, are you still confused? Are you not getting the right gateway to start your credit journey? Are you still on the grey when it comes to identifying the blind spots of credit report?

Today we will help you understand and avoid the most common errors and also tips to build your credit score,

Apply for a credit card

What better way to start your credit journey other than having a credit card in hand. A credit card is one type of unsecured loan which you can use. You will have to make the payment of the credit limit used within 50 days of time. A credit card if managed properly can help you with financial marvels like reward points, add-on cards; you can even apply for another credit card on the basis of your primary one. On the other hand, if you default any payment, you can take a serious hit on the cibil score which will stay on your report for at least seven years.

Apply for a consumer durable loan

If you are denied a credit card because of no credit score, you can apply for a consumer durable loan. A consumer durable loan is the best and easiest way to enter the credit world and it can also help you build your credit. There are a lot of vendors who are entering the consumer durable market as the market has potential. When purchasing a product, you have multiple choices when it comes to lending options.

Avoid getting into debt

Once you open a bank account and start transacting on the same, you are on the financial radar. You will receive a lot of calls from different company’s telesales department who will offer you various loan options. Avoid them and take a loan only if needed. Just because you have an attractive offer in hand, does not mean you will have to take a loan. Many people make such mistakes and end up being in debts. A healthy tip would be to avoid such calls and if needed a loan contact your primary bank branch for loan options. Some banks provide you pre-approved loan options towards your account considering your financial transactions.

Be patient

As we all know, Rome was not build in a day. Similarly you cannot expect your cibil score to go up in a very short span of time. You will have to be patient and gradually see your score go up. Like explained in the earlier point, you can opt for credit cards and other financial options to get your score up eventually.

If you are still not sure on how to start building your credit score, you can always seek professional help. There are companies dedicated for such tasks which can help you build a healthy score for future financial transactions. No process is hard if you know how the process works, be educated about credit facts and start your credit building journey with ease.

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Will Arranging My Debts Help Boosting My Credit Score?

A credit report provides a comprehensive picture about one’s credit position. The credit score which is an important part of the report factors in various variables when calculating the score and this rating helps in predicting an individual’s creditworthiness. In case you have a low score then there could be a variety of reasons for it and depending on the problem you can solve it using various solutions. Arranging your debt can help you in boosting your credit score. Let us consider a few ways in which arranging yore debt can give a boost to your credit score.

  • Consider Balance Transfer:

Balance transfer is an option that can help in better management of debt. This option can be useful both for home loans and in case of piled up credit card debt.

Home Loans run for long tenures and it is possible that during this time the interest rates change a couple of times. If you realize that the loan you took years back is at a higher rate than the current prevalent rate for home loans in the market then you could consider getting a home loan balance transfer after weighing the costs and benefits. A lower interest rate could help lower you over all liability and you may find it easier to pay your reduced installments in case you are struggling with the repayment. Longer loan tenure if agreed by the new lender can also help you in repayment.

Credit card debt is the most expensive form of credit. If you are struggling with repaying your credit card dues then balance transfer could help you. In this process you transfer your unpaid dues on one card to another card (preferably one that charges a lower interest rate), the new card company provides some interest free holiday before you need to start repaying your dues which can help the card holder. The acquiring card company may also allow repayment in EMIs which can help in boosting your score.

  • Fore-Closure Could Help in Certain Cases:

All loans and credit card dues are included in the CIBIL Report, one aspect that influences credit score calculation is the balance between secured and unsecured loan. In case your unsecured loan (personal loan, credit card dues) burden is higher than secured loan burden then it could impact your credit score negatively. In such a scenario fore-closing these (unsecured) loan could help in boosting the credit score. Though loans that run the full course are better for the credit rating in the long run but in some instances a prepayment may help.

  • Prioritize your Debt

Needless to say repaying all your dues on time and regularly is important. However if you have too much debt and are struggling with repaying them then you must consider prioritizing the repayment. Repaying one which has the highest interest burden could be a good way to start. However it is important that you list out all your debt along with their interest, overdue amount and remaining amount. If you find it tough to repay all you monthly dues then you could talk to lenders and request a loan restructuring. Here the loan tenure is increased which lowers the EMIs and makes it easier for you pay your monthly dues. You aim should be not to allow interest fee and penalties to add to your debt burden. This is definitely not one of the ways to improve credit score fast but could give you results in the long term.

Ideally one should not reach a position where their debt burden becomes so high that they find it difficult to repay their monthly dues. However in case this does happen then you should consider rearranging your debt in an attempt to better your credit rating.