If you’re in urgent need of money and want to avail quick loans, you need to have a good credit score. If you have had a bad credit score or history, it’s going to be extremely difficult to find any lenders willing to lend you money. In our last blog, we mentioned what’s a good credit score. Scoring high on the CIBIL score is an indicator of an individual’s disciplined expense and repayment behaviour. If you see lower score on your report, we suggest you few right moves that may help you improve your credit score.

  1. Avoid applying for too many loans and credit cards: Keep in mind not to apply for loans and credit cards from other banks when you know you have poor credit. The more inquiries a lender puts in to CIBIL about your score, the lower it goes. This is because everytime you apply for a loan, the lending institution will perform a credit check. This type of credit check is called a 'Hard' credit check and costs you some points on the credit score. If you have multiple credit checks in a day then you lose more points. Hold off for a while till you maintain a good credit history or obtain your credit score yourself.

  2. Check your Credit Information Report (CIR) Request a copy of your credit report and check it for errors. Checking your own credit report does not lower your points and this type of credit check is called a 'Soft' credit check. If any inaccuracies, immediately resolve the errors with the credit bureau and reporting agency. Once the error is rectified and addressed, the individual’s credit rating score also automatically improves. It is obligatory for any financial institution to act on those disputes within 30 days. Do not apply for new credit without resolving old issues.

  3. Regular payment of bills: To rebuild your payment history, make timely payments on your current debt. Also, ensure your dues are paid off. If you maintain regular balanced payment patterns, over time, this will reflect positively on your Credit Information Report.

  4. Eradicate the credit card balances: A good way to improve your credit score is to eliminate balances or any unpaid dues on loans. Such unpaid dues or heavy balances on credit cards pull your score down. Also, it is better to have just one or two credit cards and manage them responsibly; it becomes easier to keep track of repayment. The longer you hold a positive credit card repayment history the better your CIBIL rating scores. Do not use your credit card to buy each and everything. You have to keep your credit utilisation ratio (amount you owe/total limit) up to 30 percent or lesser, but do not exceed. This will not only build your credibility for financial management but also take your CIBIL score soaring with positivity, even when your monthly saving balance is low.

  5. Regularly check your score: Even as you try to improve your credit history and your credit profile, keep a check on your credit report at least 2 or 3 times a year to see where you stand and how much your score has increased.

  6. Pay EMIs on time: Make certain that you pay your credit card bills and EMIs on time, even if the debt you owe is a small amount. This is one of the important things that CIBIL looks into while gauging your credit rate. Timely payment of bills can keep your creditworthiness intact.

The next article will focus on helping individuals who have never applied for a loan (CIBIL score -1) and suggest them how they can get a loan.