The approval and denial of your loan application very much depends on your CIBIL score. A good CIBIL score increases your chances of getting faster approval while a poor CIBIL score is a major obstacle for those who are looking for urgent loans. Your good credit score will also help you get loans at cheaper rates along with many other credit benefits.
CIBIL score is based on your CIBIL report, which summarises your credit history.
What is a good CIBIL score?
CIBIL score ranges between 300 to 900. If your CIBIL score is close to 30, it is not good, and if your credit score is closer to 900, it can help you get loans at favourable terms. A credit score between 300 to 549 is considered poor, anything between 550 to 750 is quite fair. If it is between 750 to 900, it is an excellent CIBIL score.
How to improve your credit score?
Here are the simple steps to improve your CIBIL score:
Set reminders to make credit payment
In case you miss any due date for your EMI payment, it negatively impacts your credit score. One needs to be punctual when it comes to making payments of EMIs or credit card dues. If the EMI repayment gets missed or delayed, then one may face a steep fall in your credit score. If you feel guilty for missing your payment on time, then you can set reminders, so that you can make the payment on time.
Clear your dues on time
Another good plan to improve your credit score is to clear your dues on time. Your credit score hits significantly if you make regular defaults in repayment of your loans. If you miss the repayment of the loan, it will be reflected in your CIBIL report.
If you are unable to make the complete payment try to at least clear the minimum payment due, so that the card provider does not report your non-payment to the bureau.
Check for Errors in your CIBIL Report
You might have a good credit history, but there might be some errors in your CIBIL report degrading your credit score. The errors may include wrong account details, mismatched overdue, duplicate accounts, collateral details, personal information, etc.
You can resolve all these errors by raising your grievance with CIBIL online. Once all the errors are corrected, your credit score may improve.
Avoid multiple credit applications
There are two types of credit enquiries, i.e., soft and hard enquiry. Soft enquiry, when you check your CIBIL score to become aware of your credits. It has no impact on your credit score. When a lender or credit card provider fetches your CIBIL credit report from the credit bureau against your credit application, it is considered a hard inquiry.
Avail Secured Credit Card
Settled credit accounts and non-repayment on time which can lower the credit score significantly. No lender or financial institutions would prefer to issue a credit card or loan to such applicants. You need to rebuild your credit score and enhance your worthiness before applying for the credit product.
You just need a secured credit card against a fixed deposit. Your credit score isn't considered when you apply for a secured credit card application. Hence, you can get it easily.
Don’t close your old credit cards
Banks trust applicants who have a longer history and have paid their dues on time. So, if you have an old credit card account, don't shut it, even if you are not using the card anymore. Even though the card doesn't impact your credit score, it can be helpful when you go for a loan request.