The CIBIL score is used as a parameter to check the creditworthiness of the potential borrowers. The leading financial institutes lay high stress on the CIBIL score of the borrowers. These scores are reckoned based on the transaction history of the person in the financial market. If the CIBIL score of the potential borrowers is more than 700, then his loan request can be approved by the head of the financial institutes without much hassle. However, if it is less than 650, then, the chances of approval of the loan are pretty low.
You may shudder at the thought of descended CIBIL score. But, there are different ways to improve your CIBIL score. Let’s discuss a few of the simple steps which will help to reconstruct your CIBIL score.
Simple Steps to Improve CIBIL Score
The following steps will help to improve the CIBIL score over the long run.
Payment Discipline should be maintained
The repayment of the outstanding amount has an enormous impact on the credit score. The experts suggest keeping the payment schedule or else the consequences of it would be reflected in the credit score. Inconsistent payment schedule not just hampers the credit score, but it also makes you pay a higher penalty. Hence, it becomes essential to maintain the payment discipline when it comes to paying the EMIs. The best you may do to keep in check of your payment discipline is setting a reminder for EMIs.
Lengthen Credit History
The financial experts suggest that to achieve great credit history, the credit card holder needs to have an extended credit history. The ones who hold an old credit card should make it a point to maintain itas long as they can pay the bills on time. This payment pattern will help to strengthen their credit history and would also help to enhance the credit score for future purposes. For people who have closed their credit card accounts should make sure to maintain a record as proof.
Customize the credit limit
The other factor which affects the credit score to a great extent is the credit utilization ratio. The credit utilization ratio is the liable amount as the revolving credit being currently used divided by the amount of credit limit. For instance, if your debt amount is Rs. 300 while the credit limit is Rs. 1000; then, the credit utilization ratio is 30%. The experts recommend having a lower percentage of credit utilization as it will have a positive impact on the credit score. Lower the credit utilization ratio, the higher will be the credit score. Hence, the more you can restrict your credit usage, the better will be the credit score. To handle this more efficiently, you may get in touch with your lender who will help you out to customize your credit limit based on the expenses that have to be incurred.
Longer Loan tenure
In case, you have debt; then you can opt for a longer tenure to repay the loan which will help to enhance the credit score. Choosing a longer duration of loan repayment will also lower the EMIs, which will make it affordable for the borrower to repay the loan. However, the borrower has to make sure not to delay, skip, or default with the repayment process or else the credit score will descend.
Mistakes in CIBIL score should be rectified
At times, the CIBIL report can have some errors. For instance, delays in reporting details and incorrect information will reduce the credit score. Hence, it becomes essential to keep a check on the credit score from time to time, so that you may submit a CIBIL Dispute Resolution Form Online and get the information corrected.
These simple steps will help enhance the CIBIL score over a specific duration of time. A better CIBIL score will not just help to get a higher loan amount, but it will also help you to negotiate the rate of interest while availing a loan from any of the financial institutes.