Tag: Improve cibil score

What does it take to have the best Credit Score?

If you need to borrow money, you need to first prove your creditworthiness and show that you can responsibly pay back the debt in time. A high credit score helps you to qualify for almost any line of credit be it credit cards, car loans, home loans or personal loan. It helps to get the best interest rates and terms that the lender can offer. A low interest rate can save you thousands of rupees over the debt term. Considering the impact the credit score has on your financial lives, it is good to strive for perfection and work hard to get the best credit score possible.

So what does it take to improve CIBIL score and get that perfect figure of 850. Well, it needs an understanding of what goes into the CIBIL score calculation, good financial habits, discipline and patience. Follow the strategies mentioned below. These will help you improve score and pave the way to perfection.

Pay on time, every time- Your payment history is the most important factor that is considered in the CIBIL score calculation. So always keep track of the deadlines and make sure that you never miss a payment. A single late or missed payment can bring a dip in your score and move you further apart from your goal. To eliminate any possibility of error you can automate the payments so that the card company can deduct the full outstanding balance from your account at the end of the billing cycle. Set up automatic payments for EMIs of instalment loans as well. Just make sure that there is enough cash in the account to cover the payments. This way you will be rest assured that you’ve taken care of the biggest component that affects the credit score calculation. Build up an emergency fund to cover for unexpected expenses, so that you never have to miss bill payments and incur a credit score damage.

Control your credit card spending- To improve CIBIL score one needs to be mindful of the credit utilization rates. The proportion of credit line that you use as compared to the aggregate credit available should not exceed 30%. If you max out your cards, it shows you in a bad light. The bureaus get an impression that you are overly dependent on debt. So manage your debt wisely and keep the outstanding balances low. Getting a credit line increase too will help in lowering the utilization levels.

Don’t take too much debt too often-Try to live within your means and borrow only when it is absolutely necessary.  Accruing too much debt sends a red signal to the lenders that you are a risky borrower. Every time you apply for loan a new hard enquiry hits your credit report and brings your score down by a few points. Though applying for new credit affects only 10% of CIBIL score calculation, too many enquiries within a short time frame will cause more damage. And when you are trying to improve CIBIL score, every point matters.

Have a variety of accounts- The no. and kind of accounts that you are managing also affects the CIBIL score calculation. Hence it is a good practice to have a mix of credit accounts in your report. Credit scoring algorithms give more weightage if you demonstrate that you can manage both revolving and instalment accounts responsibly.

Keep old accounts open- Length of the credit history is also factored in CIBIL score calculation. If you wish to improve CIBIL score, keep your old credit accounts (that are in good standing) open for a long period of time. Do not close your old credit cards even if you no longer use them. A long history of handling debt obligations responsibly gives a boost to your creditworthiness and helps in winning the trust of the lenders.

Monitor your credit- Once you adopt good financial habits, you need to track your progress. Monitor your credit report on a periodic basis to ensure that it is in good standing. Keep a check on errors and inaccuracies. If you find mistakes, report it to the bureau immediately and get them corrected.

By adopting the above healthy financial habits one can pave the way for the best credit score. Remember consistency is the key. You need to maintain these habits to ensure that your credit score stays on top once it reaches the heights.

6 Ways to Improve Your Credit Score

If you want to give your credit score a boost, then you must understand that it won’t happen overnight. Credit score improvement is a long process. You have to be patient and just work for it. However, if you are careful enough and take the right steps, then eventually you can easily attain a promising score.

The following are 6 of the best ways to improve CIBIL score:

  1. Watching Credit Card Usage

Credit cards can help build a good credit score. However, they can also ruin it. It all depends on how you use them.

Credit utilization is one of the biggest factors that affect your CIBIL score. Using credit cards excessively leads to a high credit utilization which is harmful to your score. However, there are two ways you can tackle this problem:

  • You can limit your credit card utilization by using cash or other payment methods save for credit cards.
  • You can divide your expenses on multiple credit cards. So, if you have to buy an air conditioner worth Rs. 30,000 and you have two credit cards, then you can charge Rs. 15,000 on each.
  1. Paying Bills on Time

Plain-vanilla timely payments can do wonders for your credit score. Not only you can minimize your debt this way, you can also make a strong case for yourself for potential lenders. Banks and financial institutions simply love those borrowers who have a long history of timely payments because it’s easy to trust them with their money.

  1. Fixing Credit Report Discrepancies

How often do you check your credit report every year? If your answer to this is “once” or “never”, then maybe that’s the reason why you are unable to improve score.

There are several benefits of monitoring your CIBIL report, one of which is the identification of mistakes or errors.

It’s easy to think that a mistake or two in your CIBIL report can’t do much harm. However, it’s completely false. Mistakes in credit reports can have grave consequences that include compelling you to get a loan for low CIBIL score.

Taking an example, if your name or address is printed wrong or if there are false mentions of late payments in your CIBIL report, then your score could easily fall by hundred points or so.

Checking your CIBIL report frequently can help you find and rectify mistakes that are hurting your score. Plus, if you identify anomalies or unrecognized transactions, loan inquiries, etc. then you can also prevent a potential case of identity fraud.

  1. Adding Something New to The Mix

A singular credit history can put limitations on your score. So, if credit report contains details of only credit card usage, or a personal loan account, etc. then you can increase credit score only so much.

Even if you are doing all the right things for your score, you can’t surpass a certain limit unless you diversify your credit usage. This is because the more diverse your credit history is, the better it’s for your score. So, if your score is solely based on your credit card usage, then you can make an improvement by availing a small personal loan, auto loan, etc.

  1. Saying “No” to Minimum Payments

Minimum credit card payments and credit score improvement don’t go hand in hand. You can only choose either of the two.

Banks highlight these “minimum payments” to lure more customers into applying for their credit cards. However, minimum payments lead to debt accumulation and lower CIBIL score. So, if you really want to enhance your score then you should always pay your credit card bills in full.

  1. Debt Consolidation

Debt consolidation is not a direct but rather an indirect way to improve credit score. In this, you combine all your loans into one. So, instead of paying several EMIs every month, you need to pay just one. The result is better money management and timely payments.

Many finance experts claim that debt consolidation can help improve CIBIL score really fast, especially if pay the EMIs on time.

If you don’t want a future in which you have to look for a loan for low CIBIL score, then it’s best you start caring for your credit report as soon as possible. In fact, today is as good as any.

How your credit management can impact your job!

It is known that your cibil score determines your eligibility for securing a loan or a financial product, but it is also important while securing a Job.

These days if you are trying to get employed there are various company norms in terms of background verification to secure a job that is address, Education, Employment, etc. majority of top corporates also are indulging themselves in finance background checks for any Cibil defaults or Loan defaults. This process helps companies to understand if the person is financially sound and also takes his payment integrity seriously

 

Reasons why Cibil Defaults Worries Employers

There are numbers of reasons why you have defaulted a loan and it would make it difficult for you to secure a job.

The very first thing what bothers an employer to hire a Loan default is the question, can the candidate make a good employee if he has been offered a mid-level or higher level Job which  demands a lot of integrity and dedication. A bad Cibil score is led due to loan defaults, payment issues which obviously mean the candidate was not serious about making the payments on time. If a Candidate is unable to cope up and manage their own incomes and loses, how is the person expected to be contributing to the growth of the company.

A loan default can lead to difficult life circumstances. For example, if you don’t pay your EMI’s on time that will lead to a bad Cibil score which leads to different penalties, that means you have to shell out more money than usual, which means you have to dig more in your pocket and cut on your other expenses which can lead to mental disturbance and depression which will automatically hamper your work and no employer would take the risk of hiring such employee.

If you have are going neck to neck with another candidate for a similar position in an interview, a great cibil rating as a tie breaker will help you secure the job over the other candidate.

 

Employers Invest in Permanence

Employers always want to hire employees who are evident that they are made for a long run. They want people who can manage themselves in terms of money; stature etc. now a person who cannot manage his Loan defaults will obviously make a bad employee and hence will be not given employment options.

How to Prevent Cibil Defaults

Check your Cibil report:

Check your Cibil report on a frequent basis, in particulars to your EMIs and credit card payments. Check to ensure there are no late payments incorrectly listed on your account and if you find one, do reports it with necessary proofs.

Manage Incomes:

Manage your incomes and gains so that you don’t default on paying your dues on time, this will ensure a good credit health; a good credit health means you can try getting a quick loan at unexpected hard times.

Say no to Credit Cards:

For some people credit cards are a matter of stature and spend unwillingly on the same, but when the time comes to pay the dues one understands the expenses were just not right. Maximum number of cibil defaults is because of excessive use of credit cards and not making the payments later.

Apply for what you need:

If you are applying for a loan, calculate first how much you need and then apply majority of the times people take loans just because they have opportunity to take one exceeding the actual amount needs. But when time comes to pay dues it becomes very much difficult to cope up with the EMIs.

Seek Professional Help:

If nothing is working out and you are out of ideas to prevent further damage on your cibil default, seek professional help. There are professional agencies who help you to overcome your loan defaults ad also help you secure a loan.