Building a credit score is easy for those people who have never defaulted on their payments and have been consistent in repaying their loan amount. Alas, that is not the case with everybody. With high inflation and unemployment rates, some people find it hard to manage their loan amounts. Result? Their credit score given by credit rating agencies takes a hit ultimately. Why it is imperative to know how to increase cibil score fast is because a high credit score helps you avail any kind of loan in the future, in case of emergency if the need arises. It is worth mentioning that lenders prefer those applicants who have a credit score of above 750.
Improving payment history: The best way to know how to increase cibil score fast is by regularly paying the loan amount in a timely manner. This way, your payment history will get improved, which will eventually improve your credit score to get increase. You might not think so, but missing a single payment of your credit card or loan EMIs will hugely impact your credit score to go down. Banks and other financial institutions provide information regarding your credit history to credit rating agencies. Even if you default on your EMIs on loan amount even once, it will affect your CIBIL score to go down. Do you know, as per the CIBIL analysis, that 30-day delinquency can reduce your score by 100 points? Hence, your utmost aim should be to build your credit score by regularly paying your loan EMIs.
Lower your credit utilization ratio: Do you know credit utilization ratio is an important factor that influences your credit score? The lower the credit utilization ratio, the better your credit score will be. It is advised to use less than 30% of the total available credit limit. In case you use more than this amount, it will be considered you are highly dependent on it, which makes you the potential defaulter or who is most likely to default on payments.
Regular Monitoring of Credit Report: Keeping a regular track of credit reports is an essential practice in rebuilding and maintaining a credit score on how to increase cibil score fast. Do you know there could be instances where inaccurate personal information present in your credit report is supposed to be immediately reported to credit rating agencies by submitting disputes? You should have an error-free credit report for managing personal finances to avoid being a victim of identity theft.
Do not apply for multiple credits: Do you know if you apply for multiple credit products at once, you will come across as a credit-hungry person by the lender? And this credit-hungry behaviour will be immediately tracked by credit rating agencies which further decreases your credit score. Even NBFCs and banks doubt giving approvals to such person. Therefore, you should avoid applying for multiple credit products at once.
Do not have too much outstanding unsecured debt: Do you know that having too much outstanding unsecured debt in the form of credit cards or personal loans can negatively affect your CIBIL score? In case of emergency arises, it is advised to apply for a secured loan by pledging your asset instead of using your credit card to fund your emergency needs. Your aim should be to maintain a healthy portfolio ratio between secured and unsecured debts. If you take on too much credit, banks and other financial institutions will like to see it as a red flag and might reject your loan application. To avoid such a scenario, a borrower can take a secured as well as an unsecured loan.
Ensure you maintain older credit cards to lengthen your credit history: You should continue to maintain your old credit cards as long as you can pay your bills in full. This will, in the future, help you build a solid and lengthy credit history, which will help you increase and maintain a good credit score in the future.
Monitor your co-signed, guaranteed, and joint accounts: If you have taken a joint loan, then make sure you monitor your co-signed, guaranteed, and joint account too. If they miss one payment, you will be held equally liable for missed payments. You should know that your guaranteed individual and joint holder’s negligence could affect your ability to access credit when you need it.
Not in any circumstances, you should settle loans and credit cards: You must know that credit card or loan settlements do not do any favours for an individuals’ CIBIL score. In this arrangement, the borrower approaches their bank and then asks for a deal that will allow them to close the debt for an amount that is lower than what is due. After the settlement, it leaves a mark on the credit report, and it eventually ends up having a negative effect on the score.
Be patient and persistent in your approach: Many people search how to increase cibil score fast, but you must know a credit score doesn’t improve overnight, and it requires consistent effort to build the credit report. For some who haven’t been consistent with the payment, a CIBIL score is an uphill task but can be achieved with the help of planning and discipline. Therefore, you need to be patient and continue to monitor your credit report and spending pattern and ensure timely payment of a debt. Overtimes, it will help to boost your credit score and improve your creditworthiness.
Remember one thing, and if you want to know how to increase cibil score fast and improve your credit score, you should know it will require your time, patience, and adopting a correct approach. There are several reasons why your credit score could be low; your credit card has been used in some scam that has affected your credit score, poor payment track record, high credit usage ratio, one or more errors in your credit report, etc. It can take anywhere from six months to a year in general to rebuild your low credit score. It is important to note that the quantum of damage to your credit score also acts as a factor in how long it will take to improve your credit score. However, the time required for rebuilding your credit score varies from individual to individual to case to case.