If you have never taken a credit card, recently got a new job, or are unemployed, your credit score may be very low. In such cases, getting a loan from banks can be difficult. Banks and NBFCs check a customer’s credit score before approving a loan. The credit score helps determine whether the customer will be able to repay the loan. Therefore, it is important to have a good credit score when applying for a loan. Today, we will share some tips to help you improve your credit score.

What Should Be the Credit Score?

Your credit score ranges from 300 to 900. TransUnion CIBIL is one of the four credit bureaus that prepare credit score reports in India. The closer your CIBIL score is to 900, the better it is considered. A score between 300 and 549 is considered poor, while a score between 550 and 700 is considered decent.

Tips to Improve Your Credit Score

1. Do Not Take Multiple Loans Simultaneously

Try to limit the number of loans you take in a short period. To prevent your CIBIL score from decreasing, repay one loan before taking another. Taking multiple loans at once can make it seem like you are in a financial struggle, which can lower your credit score. However, successfully repaying a loan will help increase your score.

2. Pay EMI on Time

Repaying your outstanding loan on time has a big impact on your credit score. It’s important to stay disciplined with your EMI payments. Any delay in paying your EMI will result in a penalty and lower your score.

3. Keep Old Credit Cards Active

If you have old credit cards, try to keep them active, as long as you can pay off the bills on time. This helps you build a long and solid credit history, which will improve your credit score over time.

4. Customize Your Credit Limit

Your credit utilization ratio significantly affects your credit score. The less you use of your credit limit, the better it is for your score. Reaching your limit can lower your score. One way to manage this is to talk to your bank and customize your credit limit based on your expenses.

5. Take a Long-Term Loan

When taking a loan, choose a longer repayment tenure. This will help keep your EMI amount lower and make it easier to pay on time. Your credit score will improve when you make timely EMI payments without delays or defaults.