Tag: increase credit score

Credit Repair Do’s and Don’ts

A credit score is an important financial measure that determines your ability to borrow money. Missed EMI payments, delays in paying credit card bills, over utilization of credit are some reasons that may cause a fall in the score. If you have a low CIBIL score, and are looking for ways to get your life back on track, you are at the right place. Here we will give a complete guide to what you should do and what you shouldn’t do if you want to fast track your journey to improve CIBIL score.


Review your credit report- Check your CIBIL report to identify the reasons of a low score. A careful review will help you assess your credit behaviour. It will serve as an eye opener as to how small things like a delayed payment can have a drastic impact on your credit score. Also look for negative entries on your report that you may not recognize. If you spot any inaccurate information report it immediately as you may be a vicitim of identity theft. Disputing and getting errors corrected will help to increase credit score.

Pay your bills on time- The simplest way in which you can contribute to increase credit score is to ensure timely payment of EMIs and credit card bills. Payment history makes up 35% of your score. Even a single missed or delayed payment can bring down your score drastically. Sign up for payment reminders through email or phone or set up automatic payments to avoid missing payments. If you are already behind on your payments then create a plan to pay back your debts systematically. Keep a check on your spending habits. Trim down your expenses. Talk to your lenders to work out a mutually convenient way of paying down the balance. Take care of accounts that are more than 90 days late. If your account ends up in collections it will be very damaging to your score.


  1. Pay the card balance in full- Credit card balances attract a very high rate of interest. It is best to pay the card balance in full each month. People who pay only the minimum amount due, usually end up falling into a debt trap.


  1. Keep utilization levels low- Keep your utilization levels to below 30% of available credit limit. It works well to improve CIBIL score. You can set up alerts that notify you when you reach a certain limit.




  1. Do not close your old credit cards- The length of the credit history or the average age of accounts affects the credit score of an individual. Keeping old cards active contributes to this factor positively. Moreover if you close your credit cards, your total available credit limit on all your cards decreases, thereby increasing your overall utilization ratio. For example if you have 2 cards each with a credit limit of 50,000/- and a card balance of Rs 25,000/- (on 1 card) then your utilization will be 25,000/1,00,000 i.e. 25%. Closing one card will reduce your total available credit limit by 50,000/- Your new utilization level will jump to 25,000/50,000 i.e. 50% thereby causing a hit to your score. Hence if you wish to increase credit score never close your old credit card accounts. Use the card for small purchases and pay off the balance at the end of the month to keep the card active.


  1. Do not apply for multiple credit cards in a short span of time- Each time you submit an application for a credit card, a credit enquiry hits your credit report. Multiple hard enquiries in a short span of time display a credit hungry behaviour. This will decrease your credit score.


  1. Do not expect a change too soon- There is no quick fix to improve CIBIL score. A strong positive history develops over a period of time with consistent and responsible behaviour. It needs a lot of hard work, patience and dedication to improve your credit position before you can see some positive changes in your score.


It isn’t as hard as it may seem in the beginning. Knowledge of the factors that contribute to your credit score, a systematic plan to work on those factors and dedication to bring about change is what it takes to repair your credit.


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.

Be a Member of the Exclusive 800 Credit Score Club

Harsh finally narrowed down on the house of his dreams and in order to secure the future of his family, decided to avail of a housing loan in order to make that dream come true. Unfortunately, his loan application was rejected on account of a low credit score, and his plans were therefore thwarted. What could Harsh have done differently? Would a better score have made all the difference? Read on to know more…

Well, it isn’t always that a low credit score means your loan application will be rejected outright, but there is always the possibility. Further, even if a financer was to extend the money, it would not be at the most competitive terms – you would likely wind up paying a higher rate of interest in comparison to what someone with a better or ‘good’ score would.

What then can you do differently to have a good score? Well, do keep in mind that to increase credit score you’d need to work at it, with a fair amount of financial discipline and diligence. While it is not impossible to enhance credit score, it can take some time, so work patiently and consistently.


What constitutes a ‘good’ score?

Typically, a score is rated between 300 and 900, with most lenders considering 750 and above to be a good score. It essentially helps a lender determine an individual’s creditworthiness, or the likelihood of default in case a loan is extended.

What can you do to increase your credit score?

Now that we have established what a good score looks like, let us take a look at the things you can do to not only maintain but also over a period of time enhance credit score.

Make timely payments – Have a credit card bill or loan EMI due? Make sure you pay the outstanding on or before the due date, to ensure that your credit score is not impacted negatively. Every time you delay a payment – or worse, default – your score takes a hit.

Very often, people tend to go overdue on payment due to sheer forgetfulness. If you are unable to remember the payment date, consider setting up reminders or alerts on your mobile phone or tab. You could also avail of options such as ECS mandates or direct debits from your bank account, for sheer convenience.

Retain old ‘good’ debt – Have a credit card that you’ve been using for a few years now? If the answer is yes, do not close the card account. Having credit on your records for a reasonable amount of time indicates your repayment pattern to a lender. Of course, to make this work for you, you need to make sure that your repayment record is impeccable, and this is where timely payments come in. A clean record shows that you are likely to handle debt responsibly and hence may not pose to be a risk to the lender.

Utilise credit limit well – When you opt for a credit card, there is a pre-determined credit limit assigned to you. Generally, the rule of thumb is to ensure that you do not utilise more than 30% of the limit in a billing cycle, as the closer you are to maxing out the card, it indicates credit hungry behaviour. It is likely therefore that someone who evidently is dependent on cards may not be financially solvent.

Don’t apply for unnecessary accounts – While an offer on a new card is tempting and often hard to ignore, try to stay away, unless you absolutely need that card. The reason is, each time you apply for a new line of credit, your credit report is ‘hit’ with an enquiry, which brings down your score.

Further, it can get tempting to use multiple cards and eventually fall into a debt trap, if the outstanding dues are not paid off. To avoid spending more than you can afford by revolving credit, stay away from applying for several credit cards.

Having no line of credit – As bizarre as it may sound, having no open line of credit can also go against you, because the lender has no way to ascertain your credit behaviour. So when you apply for a loan, for example, a lender is likely to hesitate in sanctioning the amount as they are unsure whether you will make timely payments, or are likely to default.

Budgeting is the key – Don’t overextend yourself: be realistic, prepare a budget and more importantly, stick to it. Estimate what your monthly outgoings are and factor in your incoming money (by way of salary, business income etc.) and cut your cloth accordingly. Do not fall into a vicious debt cycle by spending more than you can afford to repay.

Credit counselling – If you are aware that your credit score needs some work, get in touch with a credit health management company such as Credit Sudhaar. By working with a trained credit counsellor you can build your score and maintain it well over a period of time.

In conclusion

There is unfortunately no quick-fix method of boosting your score, but to join those individuals who maintain an exclusive 800+ score, discipline and diligence is the key. Remember, there are many benefits to staying credit healthy, so start now!