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10 Guaranteed Ways to Improve Your CIBIL Score

If you wish to Improve your CIBIL Score, here are the top 10 options available:

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Every financial institutions issuer has different credit card eligibility criteria. Flickr

Whether you are looking for a Home Loan in India or any other credit facility, one of the most important things is your CIBIL Score. The higher the CIBIL score, the more are the chances of getting an approval on loan. You are also able to negotiate better deals when you have a high CIBIL Score.

Your CIBIL score is calculated based on the promptness of your repayments towards the credit facilities availed, the loans and credits that are currently against your name and your general credit behavior. Individuals with a higher CIBIL Score are considered more reliable by lenders.

If you wish to Improve your CIBIL Score, here are the top 10 options available:

1. Make Regular Repayments

The most important factor to affect your CIBIL Score is the repayment history that you have. You need to make sure that EMIs towards existing loans, Credit Card repayments, and any other credit facilities are made on or before the due date. The discipline in making your repayments leads to better CIBIL Score. It helps to set reminders on your phone for bill payments.

2. Avoid Cash Withdrawals With Credit Cards

Most Credit Cards today provide a cash withdrawal facility. Make sure that this is utilized only during an emergency. Regular withdrawals using your Credit Cards indicate a financial crunch and can reflect poorly in your credit history.

3. Have a Balance between Unsecured and Secured Loans

Having a right mix of different kinds of loans can work wonders for your Credit Score. It is a good idea to have both Secured and Unsecured Loans. Having only Unsecured Loans is also an indication of a difficult financial situation and can reflect poorly on your credit behavior. If you have a mix of various kinds of loans such as Mortgage Loans, Vehicle Loans and Home Loans in India, you are considered a much more reliable candidate for an added credit facility.

4. Reduce Debt Utilization

The lesser the loan amount that you use, the better it is for your CIBIL Score. Even with your Credit Card, minimize usage on the available limit. This reduces the repayments that you make towards these credit facilities each month. This, in turn, improves your debt-to-income ratio, which plays a vital role in your CIBIL Score.

Having a low debt-to-income ratio means that you have a sizable income that can help you make repayments towards credit facilities and also meet your day-to-day expenses.

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When you fail to make your credit card bill payments, not only does your credit score take a hit, but you also show bad repayment capabilities.

5. Make Sure That All Incorrect Information from Credit Report is Removed

It is very important for you to check your Credit Report regularly. You can get your credit information report each year or twice a year from any of the major credit bureaus. Studies have revealed that on many occasions, individuals can have a much lower Credit Score than they should actually have. This could be because of any wrong information that is entered in your Credit Report. Make sure to dispute wrong records on your CIBIL report.

6. Avoid Applying for New Credit Cards

Every time you avail of any credit facility, your Credit Score reduces. It is also true that the credit inquiry is stricter with every new application that you make for a Credit Card. Making too many inquiries with different institutions can also affect your Credit Score. This is why experts advise you to research different cards available thoroughly before you apply for one. Do not make multiple applications even if it is your first time Availing a Credit Card as it has a major impact on your Score.

7. Pay Off Your Debts

The simplest way to improve your debt to income ratio is to repay your debts as soon as possible. If you have access to any additional funds and have loans that do not charge any prepayment fees, it is a good idea to close the loan account. You can also reduce the tenure of the loan after you have made a few payments towards the EMI. This helps you close your loan account faster, and gives you a better CIBIL Score as the debt to ration income reduces.

8. Pay More than the Minimum Balance

Avoid using the revolving credit facility that is provided on your card. Yes, there could be instances when you can only make minimum balance repayments. However, on other occasions, it is a good idea to pay a little more than your minimum balance. This helps reduce the outstanding amount. Remember that your Credit Card accounts for a significant portion of your Credit Score. As a result, it is a good idea to clear the outstanding amount faster. The idea is to reduce the collective balance that you have towards different Credit Cards to enjoy a better Credit Report.

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9. Retain All Existing Credit Cards

If you already have multiple Credit Cards, it can work to your favor even if you do not use most of them. This indicates that you have long Credit History. This shows that your Credit Worthiness is high, because of which lenders can provide you with multiple credit facilities. Keeping your Credit Card account active even if it is not used frequently, your credit history lengthens and helps you improve your CIBIL Score. Unless you are paying too much towards the annual fees, it is a good idea to retain old Credit Card.

10. Get Professional Guidance

You have the option of working with professionals such as finance consultants and consumer credit counselors who help you understand your credit report in depth. This is especially useful for those who currently have a bad CIBIL Score but are unable to revive it despite trying most techniques and methods. With professional help, you can successfully improve your Credit Score effectively.

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Why you Should Make your Credit Card Bill Payment on Time: 5 Reasons

All of these outcomes can be avoided when you pay your credit card bills on time. Hence, opt for a card that offers you multiple payment options like the Bajaj Finserv RBL Bank SuperCard.

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When you fail to make your credit card bill payments, not only does your credit score take a hit, but you also show bad repayment capabilities.

Reports show that credit card usage in the country has witnessed an average year on year growth of well over 30% through 2018. Additionally, the value of all transactions by 2018’s fourth quarter amounted to Rs.1,431.3 billion. Given these numbers, it is important to know that every time you use a credit card, you borrow money from your financier to carry out the transaction. At the end of your billing cycle, your financier issues a statement containing your total outstanding amount and giving you the option of making a minimum or full repayment.

 

Figures show that close to 92% of Indians consider making timely credit card bill payments vital to their financial success. Wondering why this is regarded as a valuable habit? Read on to know more.

 

Late fees and a higher rate of interest start piling on

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Putting these together, late payment of bills makes for an poor credit history on the whole. This decreases your credit score. Pixabay

As per your billing cycle, you have to make payments by a particular date. If you fail to pay the balance or make the minimum payment, you incur a late fee and at times a higher rate of interest as well. As per an RBI notification of 2015, a late fee is applicable only if your payment remains outstanding for more than 3 days past the due date. The higher interest rate incurred may apply to the outstanding amount and also to transactions made during the time you have not paid your credit card bill. This can be costly to repay.

 

Compounding of your outstanding amount can pinch your pocket

 

A negative compounding effect is created if you fail to clear your credit card debt in its entirety. Consider that you have an outstanding bill of Rs.20,000 and a minimum repayment of Rs.5,000. While making the minimum repayment is good, it also means that you will incur interest on the remaining Rs.15,000. The following month, you will have to clear transaction costs of the past 30 days as well as pay the Rs.15,000 with interest. In this way, if you continue making only minimum repayments, you land up paying interest on interest. The same holds true in case you have not paid your bill entirely.

 

Higher monthly expenditures will keep recurring

 

Since delayed payments imply an increasing outstanding amount, you will only carry an additional financial burden every month. When faced with an accumulating outstanding amount, it is important that you clear it at the earliest. This means that for a few months you will have to add an amount dedicated solely towards tackling credit card debt to your budget.

 

Your credit score takes a beating

 

Rating agencies consider your history of bill payments when determining your credit score. Another is the manner in which you handle debt. Putting these together, late payment of bills makes for an poor credit history on the whole. This decreases your credit score. A poor credit score implies that you will have a harder time availing loans and other forms of credit in the future, especially at affordable terms.

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The higher interest rate incurred may apply to the outstanding amount and also to transactions made during the time you have not paid your credit card bill. Pixabay

You lose out on chances to increase your credit card limit

 

When you fail to make your credit card bill payments, not only does your credit score take a hit, but you also show bad repayment capabilities. The baggage of these two factors will make it hard for you to obtain an enhanced credit card limit, should you require it.

 

All of these outcomes can be avoided when you pay your credit card bills on time. Hence, opt for a card that offers you multiple payment options like the Bajaj Finserv RBL Bank SuperCard. Here you can make your credit card bill payment via the RBL MyCard App, Bill Desk, NEFT, net banking, NACH and cheque.

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The RBL SuperCard comes with other features that make it economical. You benefit from deals, discounts, and offers on products and services ranging from gadgets and accessories to food and travel. Further, this card gives you a 90-day interest-free loan, and allows you to make 50-day interest-free cash withdrawals at ATMs. You can get started availing these benefits in moments. All you need to do is check your pre-approved credit card offer. Doing so gives you instant approval and access to customised financial solutions.