Your dream house, higher studies, a brand-new car, business expansion, a family wedding, and all our dreams are sometimes threatened mainly because of financial constraints and it becomes a nightmare. A Saviour at that time is to get required finance on Loan or Credit.
However, getting a loan these days is as difficult as getting admission to a renowned institute. Fortunately, as excellent grades ensure us getting admission into an institute of our choice, an excellent CIBIL score gets us a quick and easy access to a loan.
What is CIBIL Score?
CIBIL is one of the mandate by Reserve Bank of India to establish credit worthiness of the applicant. It is a three-digit numeric summary of your credit history.
- Good CIBIL Score
- Pay dues on time
- Control credit utilization
- Balanced secured-unsecured loans
- Don’t be credit hungry
- Monitor guaranteed/co-signed persons
- Review credit history
So, let us understand how to improve and maintain good CIBIL score by following some financial discipline.
Review credit history: Reviewing your CIBIL score periodically is a good idea. It guides you to clean off the defaults in loans or credit cards and helps you rectify errors, if any. You have right to appeal on www.cibil.com for any errors noticed in your report or on any point of valid disagreement.
Pay dues/EMI’s on time: Try not to come close to your credit limit and pay your dues much before the due date. Possessing least number of credit cards, if possible just one, is always advisable. It will help you to track payables and curb unnecessary spending.
Pay your EMI’s on time: You should be prompt enough in repaying your big-ticket loans such as vehicle loan, home loan, education loan, etc. In case you are struggling to pay your EMIs then you should approach bank for debt restructuring. It will give you a leeway in managing your cash outflows and help building a constructive score.
Long credit card history: Credit card account for a longer period with healthy payment track is an advantage to CIBIL score. So, it is important to choose credit card with a long-term vision and benefits.
Enhanced Credit Limit: By respecting your financial discipline in cleaning off your monthly credits, banks usually reward you with an enhanced credit limit. Such reward shows bank’s confidence in your credit worthiness. Be wise and grab this offer. Accepting increased credit limit does not mean you must utilize the limit; you should wisely manage this facility.
Control Credit Application: Even if you have not been granted any loan, rejection gets recorded in your credit report. Therefore, you should not immediately approach another bank if your score is low. Instead you should wait for the score to improve and then re-apply.
Mix of Credits: Credits are of two kinds, secured and unsecured. Too many unsecured loans negatively affect your score. You should carefully choose loan as per your need and ensure a mix of both secured and unsecured loans. Credit cards are unsecured in nature.
Joint Applicants & Guarantors: You are being punished even if you are not an actual defaulter. If you are a co-applicant or guarantor to someone else availing the loan, you will lose on your scores if they default in repaying their debts. So be careful about who you vouch for and ensure their debts are cleared on time.
Hope you will inculcate these easy financial habits to maintain and improve your CIBIL score.
Have an easy and quick loan/credit approval!