Credit management that is diligent in nature is generally required to maintain a decent CIBIL score. Though your credit score will not improve overnight, there are some steps you may do to enhance your score. Carrying out a CIBIL Score check, then improving your CIBIL score might take anything from 6 months to a year.
The following are some of the steps you may take to increase your CIBIL score:
Credit Utilization:- Using less than 30% of your credit card limit will help you keep your CIBIL score in good shape. However, not using your credit card at all might have a negative impact on your CIBIL score. It’s a good idea to pay off your credit card debt ahead of time. High credit usage is defined as using more than 30% of your credit card limit. It is recommended that you choose a greater credit limit, since this will help you improve your credit score quickly. It’s also a good idea to keep your loan applications to a minimum as multiple loan applications might have a negative impact on your credit score.
Timely EMIs:- To keep a decent Credit score, make sure to pay your loan EMIs and credit card payments on time. Regular EMIs demonstrate to the bank that you are responsible and help you enhance your CIBIL score.
Loan Types:- Having a good mix of secured and unsecured loans might help you enhance your CIBIL score. Taking out just unsecured loans might make you appear to be a high-risk borrower.
Low Debt-to-Income Ratio:- Although your loan repayments will reduce the amount owed over time, it is also recommended that you do not exceed your credit card limit too frequently, since this will reflect poorly on your creditworthiness.
Limited Number of Credit Cards:- Credit cards might be appealing since they are a convenient way to get cash quickly, but managing too many credit cards can be difficult at times, and missing even a single EMI will harm your CIBIL score.
Maintaining Old Debts:- Having an old debt on your credit report and paying its EMIs on a regular basis presents a favourable image of your trustworthiness and can help you boost your Credit score.
The Advantages of a High CIBIL Score
With a high CIBIL score, you will be eligible for a number of market-based advantages that can help you save money and simplify your financial life. Here are a few of the many advantages of having a high CIBIL score.
Interest Rates and Credit Card Fees are Low:- If your credit score is good, you will nearly always be able to get the best interest rates and pay lower finance costs on credit card balances and loans. You will be able to pay off your debt faster if you pay less interest.
Approval of credit cards and loans is simple:- When you have a good credit score, your chances of receiving credit improve. Overall, you may apply for a loan or a credit card without fear of it being denied.
Bargaining Power:- You will have greater bargaining power if you have a good credit score. You will be able to further negotiate the interest rates on credit cards and loans if you have a good credit score.
Easy Top-up:- If you have an existing loan, you can easily apply for a top-up and raise the loan amount since the banks will look at your credit score and consider it to easily add some money to the existing loan.