A good CIBIL score can help you achieve many of your life goals with ease. Whether it’s the dream home you’ve been planning or the dream vacation you’ve been coveting, access to credit can make the process much easier. A poor CIBIL score, on the other hand, can make it very difficult to access credit. But there are ways you can improve your CIBIL score and achieve your goals.
Some of the ways you can improve your score are
Pay EMI on time
The cardinal rule of a good credit history is to keep your payments on time. This factor plays a crucial role in your score and any late payment negatively affects your score. Make sure your bank account is funded well in advance of the EMI expiration date, so there are no unnecessary bounces or penalties due to bounces.
Using your credit limit
Use your credit limit on your credit card with caution, because overusing or maxing out your credit card from month to month can affect your credit score. Also, not paying your amount due each month and only paying the minimum amount due monthly can affect your score. For example, if your credit card limit is Rs 50,000, make sure you don’t spend more than 50% of it, ie no more than Rs 25,000 on your credit card.
Credit hungry behavior
Any credit-hungry behavior — that is, applying for too many credit cards or loans in a short period of time — can negatively affect your score. Plan your credit requirements ahead of time. If you plan to buy a home, make sure you haven’t applied for any other type of credit, such as a personal loan or car loan, in the previous 3 months, so that getting approved for your home loan is easier and smoother and your eligibility is higher. Too many inquiries on your credit report is a sure way for lenders to reject your loan application.
Check your credit report regularly
It’s good practice to review your credit report periodically. Check that details such as loan closing etc. are updated correctly. Some banks do not update the branch, in which case it could be wrongly displayed on your report, which would be reflected in your score. Solve problems like this by raising the problem with the bank and the branch and fixing it right away. Sometimes loans and credit cards you’ve never taken can also show up on your credit report, in which case it’s best to bring the issue to the bureau and get it resolved so it doesn’t negatively affect your score.
A CIBIL score of over 700 is generally considered good enough for your loan application to be approved. Follow a few of these rules and you should see a positive impact on your score in a few months.