Do This to Improve your Credit Score fast
In the first place, Why is a high credit score important? The simplest answer is to get easier loan approval you need to improve credit score.
Following are several steps that you can take to improve your credit score:
1. Repay on Time
Missing out on repayments for your outstanding debt can be a big mistake as it can badly impact your credit score. You need to be punctual when it comes to paying the EMIs. If the EMIs get delayed, you not only pay penalties but your credit score will also go down.
2. Maintain good mix of secured & unsecured loans
It is always advisable to have a good mix of unsecured loans like credit cards, personal loans and secured loans like an auto loan, home loan. An individual with a higher number of secured loans is preferred by the lenders. If you have a higher number of unsecured loans as compared to the secured ones, try prepaying your unsecured loans to maintain a healthy mix.
3. Clear all Credit Card Dues
Strategically plan to clear your credit card balances before the due date and improve your credit score.
4. Avoid becoming joint holder
Avoid becoming a joint account holder or guarantor of loans as any default from the other party will also get reflected on your CIBIL score.
5. Get a Secured Card
If you get a secured card from leading banks like ICICI Bank, AXIS Bank, SBI, etc. against a fixed deposit and repay the balance on the due date, your CIBIL score will have a rise.
- Avoid Taking Multiple Loans at a Time
It is a good practice to repay the current loan before taking another one to keep your credit score away from getting low. Taking many loans at a time shows that you might have insufficient funds to pay them all. It is better to take one loan at a time and pay it successfully to give a boost to your credit score.
7. Limit your Credit Utilization Ratio
One of the ways to improve your credit score is to not utilize your credit card to its extreme limit. It is advised to keep the ratio low, preferably within the 30% mark. Let’s say, if your credit limit is Rs. 1,00,000 a month, you should try that you do not pay more than Rs. 30,000 through your credit card.
- Choose a Longer Tenure
When taking a loan, go for a longer tenure to repay the money. This way, the EMI will be low and you will easily be able to make all the payments on time. You will keep yourself away from the defaulters’ list and will improve your score.
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