Lenders and credit rating agencies often offer a free credit or CIBIL score check. Free services like these make it easy to monitor the changes in your credit score and take the right decisions to bolster your credit profile, especially if you plan to rely on credit for upcoming goals. To improve your credit score and thereby your creditworthiness, you need to understand which factors contribute to it. Credit rating agencies calculate your score based on a variety of factors such as your repayment history, dependency on credit, and exposure to different types of credit.
Your credit score is the way for lenders and credit card issuers to understand your financial standing and assess whether or not you are likely to repay credit on time. Generally, a CIBIL score closer to 900 makes it easier for you to get affordable new credit with ease. For instance, it is harder and may be more expensive for you to get a personal loan for CIBIL score of 550 in contrast to a score of 750 or up. To get pocket-friendly credit with ease, maintaining a credit score above 750 is a smart way to go. Here are a few tips that can increase your credit score and make you eligible for attractive offers.
Repay dues by their deadlines
Missing your credit card bill payments or loan EMIs can decrease your credit score. The best way to adhere to repayment timelines is by planning your loan and credit card payments carefully before you spend. By working out a budget, you can ensure you have the finances to address your credit obligations in a timely fashion. Remember, repaying only the minimum dues on your credit card is also not good for your credit profile. Always pay your credit card bills in full. In case you have too much debt, you can also consolidate your loans and repay a single loan to boost your credit score.
Have experience with a good credit mix
Have you only taken unsecured loans in your lifetime as a borrower? This is another reason for a low credit score. You can improve it by borrowing a secured loan such as a two-wheeler or car loan. Having familiarity with different types of loans not only gives you credit experience, but also helps your CIBIL score increase. Since most secured loans come with a longer repayment window and most collateral-free loans come with a shorter one, you can manage repayment easily with smart planning.
Keep track of your credit utilisation
Credit utilisation refers to how much you rely on credit in your daily life. Your credit utilisation ratio is calculated by dividing the total amount of credit you are currently using via credit cards by the total credit limit. A low ratio means that you have been using your credit card judiciously and are not credit-hungry. When you use your credit cards up to their limit every month, your credit utilisation ratio goes up. This is a red flag and causes your CIBIL score to drop as it shows you may be too dependent on credit. It is best to keep your credit utilisation ratio at 30% to improve your credit score.
Ensure an error-free credit report
Your credit report has details about your profile such as your credit history, personal information, and account information and is the basis on which your credit score is computed. Checking your credit score and report regularly is the best way to keep an eye on these factors. Sometimes your score may be low due to an error in your report. This may be due to a lender not closing your paid off loan account or due to credit card fraud. By noticing these mistakes and raising a dispute to fix the discrepancies, you can boost your credit score.
Remember, building the ideal credit score takes time. By adopting the habits mentioned above in a regular and disciplined way, you can boost your credit score. To proceed with a CIBIL score check, free services are available on the official website only once in a year. This may be not be ideal as you may want to check your score and report more often.
Apart from using the official website for a CIBIL score check, free credit score checking services are also made available by certain lenders. Bajaj Finserv, among the top NBFCs in India, offers you a CIBIL score check free of charge and at your convenience. Check CIBIL score today and take the right measures to improve your creditworthiness so you can be credit-ready this year.
