So you are one of those few who care about your credit score as much as you would care about your other financial statuses. And you know that you have a fair credit score, have never been declined any credit facility and have been chased by the lenders for taking credit from them. But do you know that the people with fair credit shall remain the ones that any lender would want to fund. This would be because they would not get delinquent yet a marginally higher fee and rate of interest could be charged from them. Now if you are among those whose score is around 750 which is a fair score, you must look at turning it into a good credit score to be able to unlock the benefits and saving money. Just to mention, the people with a good credit score which presumably is greater than 800 will tend to get better deals from lenders and thus save huge sums which otherwise would have got paid in the form of interest.
You must follow the following 4 step approach to increase CIBIL score.
Taper down that debt on your credit cards
This is one of the most important factors that most of the people are unaware about. Common assumption is that repayment of dues in time is the sole factor. What people do not realize is that the percentage of credit limit utilized is also as important as the repayment. So in case you are one of those who utilize the prescribed limit to fullest, be cautious. Taper down the use and repay the outstanding amount to bring down the outstanding to a level of about 30% of the limit.
Lower usage of the credit limit is going to help in two ways. The outstanding amount against the approved loans and limits is one of the major factors that impact your credit score. By bringing down your outstanding amount your ratios will improve and hence will help in improving the score further.
Also, maxing out on the limit has the potential of pushing into debt trap that can negatively impact your credit profile.
Must bring all your accounts to current status
A delayed payment can have huge negative impact. So just in case you have missed any of your payments ensure that the same is paid up immediately. Put up standing instructions, put reminders two days before the due dates to check on balances can be a few steps that you could take to avoid delayed payments. Repayment is the most important factor that impacts the three digit numerical expression of your credibility.
Check your report for anomalies or errors
Errors in reports are quite common. Just to abreast you, one of five reports is assumed to have an error and 70% of errors are proven to be major that will impact the credit profile. This is as per the survey and study conducted by Credit Sudhaar. So it will be prudent to start by obtaining your credit report. You may be aware that as per RBI directive you can obtain your free CIBIL score and report every year. Check out if the report is updated correctly. There are cases where not only the account repayment updation has anomalies but a loan or credit card never taken by you may also form part of the report. In case you find any concern, please highlight it to the concerning bank and the bureau.
Do not close your oldest account
Length of credit history also impacts your credit score. Therefore, it is in your best interest to continue with that oldest credit card that you may be finding not worthwhile for the features or the fee that gets charged on it. If there is a fee to it, you can always ask the bank to waive it off. But do not just surrender that card without a very good reason since it will help you in achieving a good credit score.
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