Loan assist: Want to improve your CIBIL score? Here are 4 steps
Here are some tips that can help you boost your credit score to get a hassle-free loan.
FollowThe three-digit CIBIL or credit score is used by lenders to decide whether to grant you a loan or not. In fact, it has now become a big factor that determines your financial stability. The higher the score, the more chances you have of securing a loan without any hassle. However, if you don't have a good credit history and you want to improve it to get a good credit score, you can do so. The sooner you resolve your issues, the faster your credit score will rise. Here are some tips that can help you boost your credit score to get a hassle-free loan.
Pay High Debt Amount
You should try to keep your credit utilization ratio below 30 per cent. The credit utilization ratio is obtained by dividing the amount of credit availed by the total revolving credit available. Experts say that if the ratio is kept around 10 per cent in normal conditions, then you can be in a healthier rating. According to Radhika Binani, chief product officer at Paisabazaar.com, ideally, if you have a low credit score, you should work towards improving your score by reducing your overall loan amount rather than increasing it by getting new credit.
Also Read:Â Home loan process: Here are 10 charges you need to pay
Avoid Late Payments
Stay on track. Always set up alerts related to loan repayment and credit card payments. Ensure that you do not wait till the due date to pay off the monthly dues. The credit bureau tracks the behaviour of your payments made every month and decides the key factors in calculating the score. The score is calculated based on your payment track records. Pay your dues on time and you will see your credit score improving.Â
Pay Credit Card Dues in Full
If you are using a credit card, then it would be preferable to pay off the due amount within the billing cycle. Thus, if you do so, there will be no interest charges on your bill on your due payments in the consecutive months. However, if you do not have enough money to make the total payment, at least pay more than the minimum payment due. If you pay the minimum amount due, your outstanding balance will attract higher interest charges, which the lender charges every month. And, in turn, this small amount will draw roll-over interest and inflate your dues every month. That can affect your credit score.
Avoid Too Much Debt
Sometimes you end up taking too much debt or use credit cards to pay off debt or when you need a large amount of money. Adil Shetty, CEO of BankBazaar.com, says that opening multiple new credit accounts in a short period of time may indicate greater risk, especially for borrowers with shorter credit histories. The lender probes your credit history every time you apply for a loan or credit card. Such frequent requests give the appearance of you being credit hungry and can lower your score. For the same reason, it is not a good idea to apply to multiple lenders and then choose the one that offers you a loan or credit card.
Also Read:Â SBI Life Insurance Policy holders should be aware of these latest updates
