Are you unhappy with your low credit score? Don't worry, you are not the only one to face such a problem. Building a high credit score is not always easy. It doesn't help that a lot of people aren't aware of the good financial habits and end up making mistakes that cost them their credit points. However, it doesn't mean there is no solution.
There are various ways to improve credit so that you don't have to take a loan for low cibil score. In fact, you can do it all yourself!
To fix your low score on your own, just follow these 5 easy steps:
The first thing you need to do is check your credit history for which you need to get a copy of your credit report. If you haven't checked it in a year, then you can qualify for a free copy as per RBI's norms. All you have to do is go to your credit bureau’s website, provide a few details for authentication purposes, and then they will send the report to your email address.
Checking your credit report will help you find the problems that have led to the low score. However, you can also look for discrepancies and mistakes in your personal details, account details, repayment history, etc. If you find any, then you can get them corrected which will improve your score.
Banks don't just want to see that you have repaid a personal loan on time without any late payments, they want to see that you use credit cards too, or have a history with a car loan, home loan, etc. The thing is- they want to see variety in your credit report because it helps them to trust you easily. In the same way, credit bureaus give a high score to customers who show credit diversity compared to those who have a single-dimensional credit history.
If you want to take a loan for low cibil score, and make progress as quickly as possible, then you can take a small personal loan or apply for a credit card if you aren’t using one already. Just be sure to manage your credit wisely. There is no point in taking a big personal loan when you can't pay its installments on time.
How often do you use your credit cards and what's your average monthly bill like? If you are spending more than 30% or 35% of the sanctioned credit limit, then it could be one of the main reasons why your score is poor.
Using credit cards in moderation is advantageous for building a high score. However, excess usage can be detrimental too. Thus, use your credit cards but wisely. If your credit limit is Rs. 1 lakh, then don't spend more than Rs. 30,000 in a month. Instead, use cash or a mobile wallet whenever possible.
Make it a point to pay every single credit card bill and loan EMI on time. It's really important that you are never late because when it comes to credit score calculation, every single payment matters. In addition to that, a clean repayment history also puts you in good light for the lenders.
The last step to fixing your low credit score is monitoring your report on a regular basis. There is no other way of observing your progress.
Furthermore, you can also review your repayment history to see that the information is accurate and devoid of mistakes.
The CIBIL score ranges from 300 to 900. However, a score above 750 is considered "good". So, you can follow the steps given above and monitor your report till that score is achieved. Once that's accomplishment, you can continue reviewing your report even if not as frequently as earlier so that you can identify any problem before it snowballs into a disaster.