5 Simple Ways to Increase Your Credit Score

4. Don’t get too many credit cards

If your application is being rejected, don’t just keep applying for a new card repeatedly, as this information is also recorded in the credit score report. If multiple rejections show up on your report, you will be considered credit hungry and your score will decline. So keep an interval of 3 to 6 months so that your credit score gets time to improve before you apply for a new credit card.  

5. Monitor Your Co-Signed Loans  

Another way you can improve your credit score is to closely monitor loan accounts that you have co-signed and if possible avoid being a joint applicant. Being a joint applicant for a loan can put your credit score at risk if the primary borrower defaults. Defaults of co-signed loans show up on your credit report and adversely impact your credit score. 

The above 5 methods are the best ways to improve your credit score but they are not the only ones. Other tips you can follow to improve your credit score are:

• Keep track of all your EMIs and repayments to avoid missing deadlines. 
• Don’t close credit card accounts and open new accounts frequently
• Maintain a balance between secured credit and unsecured credit
• Do not max out your credit card frequently

As long as you follow the above tips, you will be able to increase your credit score. However, do keep in mind that improving your credit score can take time from a few months to over a year depending upon how low your credit score is to start with. 

Why Does Having Good Credit Score Matter?

Improving your credit score might seem like a time-taking and difficult task. But there are multiple reasons why you should take the trouble of maintaining a high credit score. Here are some key advantages you get, if you have a high credit card score:

1. A good credit score indicates that you are responsible when it comes to repaying loans and credit card bills. No financial institution wants to lend money to a person who is not trustworthy. 

2. If you have a high credit score, banks and other financial institutions will grant you a loan at a lower interest rate. A good score also means lesser paperwork! 

3. Though various other factors play a crucial role while granting a loan, one cannot ignore that your credit score and history is one of the main deciding factors. 

4. A good credit score will make your loan application more attractive and can increase the speed at which your loan application is processed.

5. Also, a higher credit score increases your chances of getting approved for a longer tenure to repay your loans. This means you can pay smaller EMIs for a long time, which means less burden on your pocket. 

6. The increased credit card limit is another benefit you will receive if you have a higher credit score. 

FAQs

1. How can I check my credit score? 

You can easily check your credit score by visiting the website of any of the 4 Indian credit bureaus – CIBIL, Equifax, Experian or CRIF Highmark. You can just enter your details like PAN, date of birth, name, etc. Once your identity and other details are verified, you credit report and score will be generated.

2. What is the ideal CIBIL score for acquiring a loan? 

CIBIL score ranges between 300 to 900. A score above 700 is ideal for applying for a loan at any financial institution. However, if you are planning to apply for an unsecured loan, having a CIBIL credit score above 750 is considered good. 

3. Who calculates credit scores in India? 

In India, the Credit score is issued by 4 different credit bureaus. These are CIBIL, Experian, Highmark and Equifax. CIBIL is considered the most popular as it is also the oldest. Lenders request credit history from any of the credit bureaus to determine whether the applicant is creditworthy or not.   

4. I want the bank to write-off my loan will it impact my credit score?  

Yes. If you get an outstanding bank loan written off or decide to settle an outstanding loan, your credit score will decrease. It is best to pay off your outstanding loan in full. You should opt for a write-off or loan settlement only as a last resort if you are unable to pay the loan.

5. I have multiple investments in shares and mutual funds, but my credit score is only 650. Why is this happening?

Your investments in mutual funds and stocks do not have any impact on your credit score. So, you need to check your full credit report to know the reason why you have a low score.  

Sources:

https://www.hdfcbank.com/personal/resources/learning-centre/borrow/7-smart-ways-to-improve-your-cibil-score    

https://www.outlookindia.com/website/story/business-news-five-steps-to-improve-your-credit-score/400989

https://www.fullertonindia.com/knowledge-center/good-cibil-score.aspx

https://indianexpress.com/article/business/banking-and-finance/good-to-know-3-reasons-why-you-should-check-your-credit-score-credit-report-regularly-7863559/

https://www.cibil.com/faq/understand-your-credit-score-and-report

https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=763#5INT

https://economictimes.indiatimes.com/wealth/borrow/what-does-status-like-closed-settled-and-written-off-in-your-credit-report-mean/articleshow/52554129.cms

https://indialends.com/things-you-wont-find-in-credit-report

ARN No: Nov22/Bg/15