Keeping a good credit score always pays off. A high credit score makes it easier to get loans at a lower rate of interest. On the other hand, a low score can affect individuals who have immediate financial requirements. These days, it is mandatory for every bank to verify the credit score of applicants of all financial products like home loans, personal loans, and credit cards.
Credit Information Bureau India Limited (CIBIL) is the leading rating agency whose monthly credit reports are useful for banks in the identification of credit-worthiness of borrowers. There are times when this score can go low.
If you recently found out your credit score is low, here are some tips and tricks for you to improve it:
Review Monthly Credit Score
A credit score between 700 to 900 is considered good, which helps you get many benefits while taking loans. Various online tools can help you check the monthly credit score. It will also let you know the areas which are most affecting the score. For instance, if you have a one-year-old credit card for which you have not made payments on time, it will reflect on the credit report and affect your credit score. Similarly, various other factors are responsible for a good credit score that should be considered and dealt with reasonably.
Set Up Loan Payment Reminders
It is also imperative to make loan EMI payments on time for improving your credit score. Previously, if it has not been in practice, you can set up reminders for future payments. It will help clear dues on time.
If you have missed any EMI earlier because of the loss of a job or unforeseen events, it is advisable to pay back the money once you are in a healthier financial condition. For this, you can contact your concerned credit lending bank to make them aware of your current financial situation. Clean credit history will only allow you to continue enjoying better credit terms.
Maintain All Credit Cards Well
Credit cards are responsible for building your credit history over time. Therefore, it is essential to maintain them well. If any dues are pending, it should be cleared as soon as possible to have a better credit score. Old credit cards also help lengthen the credit history, which is equally important to know the credit-worthiness for future loans.
Customize Your Credit Limit
The utilization of the credit card limit affects your credit score considerably. It is in your best interest if you limit this usage. For most credit cards, it can be done through the bank’s app. If it is not possible to understand the operations, you can contact your bank to set the limits.
Check for Wrong Information on CIR
There are times when your Credit Information Report (CIR) can reflect wrong or missing information, which impacts the score. In such cases, it is prudent to contact the concerned bank and raise the dispute immediately. It will expedite the process, as well as help, improve your credit score.
Maintain a Diverse Portfolio
It is imperative to have a diverse portfolio of secured and unsecured loans for better credit scores. An apt combination includes car loans, credit cards, personal loans, home loans, and similar others. If your credit history only comprises unsecured loans like credit cards and personal loans, it can sometimes be perceived negatively by the banks. Therefore, maintaining a diverse portfolio of loans is essential.
If you maintain a good credit score, you can also opt for increasing the spending limit of your credit card. Many reputed banks like Axis bank offer credit cards, with various benefits customized for individual needs. You can also use their online facilities for quick issue-resolution. Keep in mind that selecting the right bank to borrow a loan, be it personal, home, or education loan is also crucial.