Low Credit Score Of Below 750? Here are Some Pivotal Ways To Improve Your Credit Score
A credit score is one of the ominous terms that make even financially aware individuals squirm in their seats. Maintaining a good credit score & history is crucial for your financial wellbeing. One of the first credit companies in India, CIBIL or Credit Information Bureau Limited, was launched in 2000 & since then has been the most renowned and popular credit agency in India. Lenders simply collate all the credit-linked data of the individual and send it to the agency.
Through this data, the lenders score the individual’s credit history in the range between 300 and 900, wherein a credit score of more than 750 is considered healthy. This credit score serves as one of the quantitative measures to show your credibility and is utilized by banks and various other lenders when you submit a credit application.
Thus, what should you do if your credit score is low? With effort and time, you can steadily improve your credit score. However, note that you must keep a continuous CIBIL score check to know your score act accordingly. Doing this also helps you identify any information discrepancy responsible for pulling down your credit score. To further improve your score, you can call up the CIBIL score customer care number. This can provide quick resolution. Here are methods to improve your score:
Form a good credit history
A common myth among individuals is that holding no credit whatsoever ensures an excellent score. Note that a whopping 30 to 40 percent of your CIBIL score is based on your credit history. Good credit history is of great importance when it is about availing credit or loan approvals.
Repay your dues within the time
It is a no brainer. The timely payment of the loans and bills ensures a healthy credit history. It even indicates you repay your dues within time and do not conduct any default on your payments. In case you have several credit cards, it is a wise choice to not lose any of them. It is a good way in India to add additional data to your credit-linked history and form a positive impact on it. This said, you must keep multiple credits just if you can simply repay the dues on time as well as maintain a minimum balance on such cards. Your whole credit exposure makes up twenty-five percent of the credit score. Low Credit Score Of Below 750?
The next crucial point to note is to pay all your credit card dues in full within time. When a card bill gets generated, the customer generally is given 2 options – to either pay the whole amount in full at once or repay the minimum amount due that is determined by the creditor.
While you might be very tempted to choose the second payment choice more, note that the remaining amount due is an overdue amount and not just charges higher finance charges on the unpaid amount of up to 52 percent p.a. but also may impact your credit score negatively. Impact on your credit score is indirect as not paying your minimum amount due does not bring down your credit score. Instead, unpaid bills affect your credit utilization ratio (CUR), leading to the outstanding due generation and other impacts that negatively affect your credit score.
Apply for the loan just when you require it
Hoarding up the loan is not going to do you good. It just reveals that you are credit hungry and can reflect poorly on your credit history. It is very wise to keep the number of credit applications to a minimum as any kind of loan you have availed, and its repayment tenure contributes to another twenty-five percent of your overall credit score. Also, you must ensure to mix up the type of loan you submit the application for. You must aim to create a healthy mix of unsecured and secured loans, which can help maintain a good credit score.
In case you have no credit history or credit score, ensure to build it by applying for a regular credit card. In case you are unable to avail of a regular credit card due to no credit score, unserviceable location, or low income, you can avail of a secured credit card. It is a kind of credit card available against your fixed deposit. It is one of the great avenues to ameliorate your credit score. To know if your credit score has improved, ensure to conduct a CIBIL score check regularly. Once your credit score has improved or enhanced, you can avail of regular credit cards.
Overuse of the available credit
Overutilization of the whole credit limit available to you periodically is considered a red alert. It indicates that you entirely depend upon your credit and most probably use it over your earning, which can impact your credit score greatly. Being completely dependent on credit makes lenders or creditors view you as a credit hungry individual. This usually makes them hesitant to provide you with credit options.
Avoid conducting impulsive expenditures.
An old but crucial rule: always give it a second thought before splurging. Do not swipe your credit card to purchase any product or goods that only hit the market. Take time to understand whether you require to spend that amount to purchase the item. While it is crucial to ameliorate your score, note that it is a steady and slow procedure.
It would take nearly a year’s worth of effort on average to view the outcomes in your credit-linked report. Ensuring that you have a healthy credit score and credit history can assist ease your financial frets and is worth all your time and effort. Thus, why wait to take relevant moves to improve your credit score.
Remember to repay your credit dues on time by the due date, maintain a lower CUR or credit utilization ratio of below 30 per cent, maintain a healthy mix of credit between secured and unsecured credit options and periodically review your credit report to detect any error or discrepancy.
Low Credit Score Of Below 750? Here are Some Pivotal Ways To Improve Your Credit Score 2022