Are you someone who is in dire need of getting a personal loan but facing rejection due to the financial sins that you have committed in the past? Your poor credit or CIBIL Score has become a stone of the road to you loan? We know a good credit score is a key that can help you borrow from banks and other non-banking financial companies. So, here is a guide through which you can improve poor credit score.
What is Credit Score?
The credit score is a numerical value which depicts the creditworthiness of a borrower and includes the information of the credits that are taken by him or her throughout the year. It is also a way to know that how much credit you have repaid to the bank or any other lender. The credit score also reveals if the borrower has missed any loan instalment or credit cards payment.
How to Improve Credit Score?
As per the Indian Banking System, a good credit score ranges from 700 to 750, and anything less than this would be considered as poor one. Improving credit score is not a magic, in fact, it is a time taking and tedious process. It is also said that a quick-fix effort is likely to backfire the most. We highly recommend you to follow below given advices to improve your CIBIL score.
Improve Credit Utilisation Ratio
Credit Utilisation is a ratio of the total credit card balances by the total available credit. Your credit score gets hugely affected by your overall credit utilisation rate in all cards and the rates in each card.
30% or less is what that lenders likely to see as your Credit Utilisation Ratio. Lower the ratio shows that you have never reached the threshold of your credit limits and knows how to manage your credit and expenses at the same time.
Set Payment Reminders of Credit Cards
One of the biggest factors that contribute a lot in your credit score is making credit card payments on time. There are several banks that often send you reminders on your mail ID or mobile phone. However, some of those reminders either end up in your spam folder or you hardly bother to look your phone’s inbox. This is why, you should consider opting for automatic debited option of your credit card through your savings bank accounts.
Pay Bills on Time
Paying all the bills on time is a habit that takes a lot of time to cultivate and can impact a lot in your credit score. But once cultivated, it will take all your financial sorrows away. Any pending bill on your name leaves a long-lasting negative impression on your credit report and hence will highly deteriorate the chances of your loan approval.
Replace Bad Credit With Good One
If you have changed your practices, you can see your bad credit getting replaced with the good credit to improve your credit score. For this, you have to show your creditors that you know how to supervise the payments and have everything required to build a good credit score. Though the process is a bit time taking but, in the end, you will be able to yield results as per your requirement.
Having a bad credit score is not something that is new for you or anyone but improving it and bring it in the range of 700 to 750 is what you call a challenge. So, accept and improve your poor credit score.