In this era of inflation, many times the common man has to take a loan to fulfill his needs. Apart from all the government-private banks, many non-banking finance companies (NBFCs) give loans at different interest rates, but for this, it is necessary to have a good credit or CIBIL score. If the CIBIL score of the person applying for the loan is good, then they can easily get a loan at the lowest interest rate. Also, banks give pre-approved offers to customers with good scores. Let’s know some ways to improve the credit score.
What to do to maintain a credit score
Improving CIBIL or credit score is not a one or two-day job. It takes a long time. If you have already taken a loan, then keep paying its monthly installments from time to time. If the EMI bounces or you make a late payment, some points will be reduced in your credit score. To avoid default or delay in installments, set auto pay or a reminder. With this, the money will be deducted automatically as soon as the due date arrives.
Why is it necessary to pay credit card bills on time
If you have taken a credit card to fulfill your needs, then pay on time. This will always keep your credit score good. Also, you will not have to pay any kind of penalty. If you do not pay your credit card on time many times, then your CIBIL score can go below 600, due to which there can be many problems in getting a loan or credit card in the future.
What to do if you are unable to make a payment on the due date
If a person is unable to pay the credit card bill on the due date, then this information appears in the DPD (Days Past Due) section in their credit report and remains recorded in the report for the next 3 years. Therefore, if you are unable to pay the full bill on the card, then at least pay the ‘minimum amount’. So that the credit bureau does not get information about you being a defaulter.
Why is it necessary to avoid taking loans repeatedly in a short period
When you check your credit score yourself, it is called a soft loan inquiry. This does not affect your credit score much. But when you apply for a loan or credit card, the concerned bank or NBFC checks your credit score, which is called a hard loan inquiry. In such a situation, if you apply for a loan or credit card repeatedly in a short period of time, then it spoils your CIBIL.
Why not close the oldest credit account
Banks consider customers who have a long or old credit history and have paid every bill on time as more reliable. In such a situation, if you also have an old credit card account but you do not use it now, then do not close it. This will help the bank or NBFC give the loan in the future to accurately estimate your credit behavior and stability. Also, it will be easier for you to get a loan.
How to improve a credit score in 30 days
To improve your score, set a target of keeping credit utilization below 30%. If you have a due amount on your credit card, paying it off will have a positive impact on your CIBIL score. Try to pay off as much of your credit card debt as possible in the next month.