Most of us are aware of the importance of credit score and more so in case if any of our loan application has been rejected. Generally a bad score is a reflection of a bad financial health, except in the case of some genuine errors that get captured on one’s credit report. Ideally, if one follows basic financial discipline the credit score should not be low but we do not live an ideal world. So in case the credit score is low what can you do? Following a few simple steps can help improve CIBIL Score. Having said that, one should remember that credit score improvement requires time and patience and is not a pack of instant noodles.
Alongside is a simple flow chart that is self explanatory; it lists the three basic steps are required to enhance credit score. Let’s look at each one individually.
Identify The Problem:
The journey begins with the first step; so the first thing is to identify the problem that is the cause of the poor credit score. This can be understood by going through your credit report; the score just reflects the credit report numerically. A look at the full credit report is required for you to understand the reason behind a low CIBIL score. Problems can be single or multiple, simple or complex so the key is to identify the cause or the causes.
On going through his CIBIL Report, Amit realized that an old credit card which he did not used for quite some time was the main cause of his low credit score. When he changed his address a while back he did not inform the credit card company about his new address as by that time he had stopped using that card. However since the card was not cancelled officially, renewal charges were charged on it, their nonpayment led to piling of charges and penalty.
There can be other issues like this oversight, too much unsecured debt, a high credit utilization ratio, delayed payments or missed payments.
Find a Realistic Solution:
It is very important that the solution one looks for is realistic and practical. If you have too much unsecured debt (personal loan and credit card dues), a solution that says pay all unsecured debt is not a reasonable one. First of all you might not have sufficient funds for it and second paying of a loan can temporarily lower the CIBIL score. The solution should be realistic, long term and sustainable. Like in the earlier example, Amit can resolve the problem by paying the due amount after negotiating with the credit card company. A few changes can contribute to improving your CIBIL score; they are:
Keep the Credit Utilization Low: This can be done either by increasing the credit card sanctioned limit or curbing your credit card expenditure. Credit utilization ratios impacts the credit score immensely and a change in this aspect could affect the credit score dramatically.
Pay All Dues on Time: This is by far the most important factor. Whether it’s the credit card dues or your EMIs always pay them on time. There is no alternative available to this simple solution; doing this regularly impacts the credit score positively to a large extent.
Sort out pending issues: Small, long pending issues can become eyesores in a credit report. Sorting them out and getting them removed from the credit report can help in restoring your credit score.
Don’t Apply for too many Loans: Whenever you apply for a loan the financial institution makes an enquiry into your credit score; this is known as a hard enquiry. Too many hard enquiries affect the credit score negatively. Thus do not apply for a loan till you are absolutely sure about the process and eligibility and know that you meet the conditions set by the FI.
Follow the Plan:
After you identify the problem and find the right solution to fix it; the next step is to stick to the plan diligently. The entire exercise is wasted if you do not follow the schedule that you set for yourself. If you have identified that the problem as high credit utilization and the actionable plan is to reduce the monthly spending on the credit card then make sure that you follow this every billing cycle. Doing it once and not doing it the next month might not give you the desired result.
Similarly if the issue is old dues then make sure you contact the credit card or the loan company, follow up with them and do what is required to sort out the issue and get it removed from your credit report.
In case your credit score requires restoration then follow the above process to make it healthy again. It will definitely improve with time and some careful planning.
I need my cibil score. AIUPD5157B
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Maru acc improvel kari apajo
I had a credit card of icici bank and I did not pay the amount for more then 5 years as I was not aware. Also I had taken durable loan from future capital 3 instalment were not paid and the company name changed to capital first, their was no call from company side not from the Delair. I applied for credit card after 5 year but application regected. And I checked my cebil it was NA. I got an credit card against fd. I have checked with icici about the due and I have paid it fully. Now my credit score as per cibil say 740 but still I am not getting any lone or credit card . Can you help me .
Greetings from Credit Sudhaar!!!!
Apologies for the delay in response.
The reason you are facing rejection on loans is because of your ICICI credit card and Future Capital consumer loan. These accounts will be having a negative remark on the bureau report.
I would request you to help us with your contact number and we can arrange a callback for you from one of our representative who will help you to understand our services. You can enroll with us and get yourself credit healthy.
Looking forward to hear from you.
Dear Mr Kachhaf,
Greetings from Credit Sudhaar!!!!!
To help you in improving your credit score we need your contact details such as mobile number and email id. We will arrange a call for you from one of our representative.
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