HOW CAN YOU IMPROVE YOUR CREDIT SCORE?

loan with bad CIBIL score

A consumer’s creditworthiness is dependent upon their credit score, which is a statistical number that determines one’s credit history. Lenders refer to your credit score to determine the probability of debt repayment, which falls within a numerical range of 300 to 850. The higher the score, the more financially trustworthy you are perceived to be. While you can also apply for bad credit loans, as there are numerous financial institutes that offer a loan with bad CIBIL score, you would have to deal with limitations on loan amounts and higher rates of interest. Hence, it is advisable to boost your credit score, which catalogues account behavior over the years, and cannot be boosted overnight. You can improve your credit score in the following ways:

1. Monitor Credit Card Balances

The percentage of revolving credit versus actual credit usage influences your credit score – smaller percentages mean better credit ratings, the optimum amount being 30% or lower. In order to boost your score, pay off all pending balances, and aim to keep them in control. In case you are struggling to maintain multiple credit card balances, it is advisable to consolidate them with the help of a personal loan. Also, check if your credit card issuer accepts multiple payments throughout the month, as it helps keep your credit card balance in check. You might not give importance to small, negligible balances, thinking that they amount to nothing. On the contrary, paying them all off at one go can make a significant improvement on your credit score.

2. Leave Old Debt On Report

It is an erroneous belief that old debts on credit reports create an unfavorable impression. Negative items on your credit report automatically fall off after seven years. However, positive debt – debt that you have handled well and paid as agreed – is definitely good for your credit. In order to improve your credit score, leave old debt and good accounts on your report as long as you can. Also, do not close old accounts with solid repayment records attached to them.

3. Utilize Your Calendar

While shopping for a house or car, or applying for a fast cash loan, a year-long dip in your credit score is bound to occur. This can be attributed to the logic that if an individual makes multiple applications for credit, it generally means they wish to acquire more credit. However, with the help of three kinds of loans — mortgage, auto, and student loans — scoring formulas permit multiple applications and take out only one loan. Shopping periods depend upon the credit score used, along with the kind of scoring software used by lenders.

4. Pay Bills On Time

While planning a major purchase, we often struggle to assemble big wads of cash. While in the midst of juggling bills, you would not want to pay your bills late. The most straightforward and quick way of increasing your credit score is to make hassle-free, on-time payments. Inability to manage your finances in an efficient manner can plummet your credit score. A smart move would be to put cash into a savings account without compromising with your regular payments.

5. Be Mindful

Prior to acquiring credit, you should focus on your credit report minutely, and in the interim period, pay all your bills and use your credit card judiciously. These smart spending trends will reflect on your credit score. Scores acquired through banks or other financial institutions can help you gauge how well you are managing your credit. These reports will also grant you personalized methods to improve your credit score. If you send for a credit report every four months, you can monitor your credit for free from time to time.

To conclude, ‘fixing’ a credit score is primarily about remedying errors and lapses in your credit history. However, this is a process that demands consistent patience and determination.