No matter how much financially strong you are, it's likely that you will take at least one big or small loan in your life. However, what are you to do when you submit an application and it's rejected on the grounds of low credit score? To understand this problem, you must first understand what your credit score is and how it affects you.
Your credit score is the numerical representation of your creditworthiness. So, if you have a high score, then getting personal loans, home loans, etc. is really easy. Similarly, if your score is low, then you can have a hard time getting credit. In fact, you may not get even a small loan.
In India, there are several credit rating agencies which create the credit reports of millions of Indian credit users. For instance, Credit Information Bureau of India Limited (CIBIL) is one of the top agencies in India which provides credit reports to the banks who base their decisions for loan approvals with regard to the same.
CIBIL scores the users on a scale of 300-900. However, your score must be at least 750 to be considered a good score.
If it's become nearly impossible to get bad credit personal loan, then you must improve your score- there’s no way around it. That said, it isn't as hard as it sounds.
To improve your credit rating as quickly as possible, just follow these steps:
The first thing you need to do is check your credit report so that you understand what the problem is and what's your current score stand at. There are various things that can lead to a poor score, such as:
Late payments cause the biggest damage to your score and create hurdles when you need personal loans, credit cards, etc. So, if you want to improve your score at a fast pace, then you must start paying your credit card bills and loan EMIs before at the right time. Don't make the mistake of thinking that a single late EMI or two won't make a difference. There are many banks that take payment schedule quite seriously and may notify your credit rating agency if a single payment is missed.
Your credit report contains all kinds of important details including your bank account information, payment history, and personal information like name, address, contact number, etc. If there is any mistake or discrepancy in these, then it can lead to a low score. So, if you do encounter a mistake, you should immediately contact your bank and have it corrected.
By removing the discrepancies from your credit report, you can instantly increase your score. Moreover, checking your credit report also helps identify identity frauds in which the scammer tries to obtain loans or credit cards under your name.
Defaulting on a loan is a serious offense and can ruin your chances of getting another loan in the future. Thus, many people decide to repay their remaining dues even if the bank has closed the account. This allows them to eliminate bad debt from their report and avoid any bad credit personal loan issue.
If you have paid the balance amount after a "loan settlement" but your credit report still mentions the issue, then you can contact your bank and request them to get it removed by intimating the credit bureau. If all goes well, your report will get in good shape within a few weeks.
There are still many people who don't realize its significance and end up making the wrong financial decisions that hurt their credit profile. However, in the majority of cases, you can reverse the damage. Of low cibil score The points discussed above should be able to help you to a great extent. Good luck!