Today people are extremely dependent on credit. Some people are dependent on it to a level that they need it just to bring food on the table and keep the lights in their house on. Your access to credit depends on various factors. Your CIBIL credit score is one of the crucial factors which sets the limit of your credit cards and access to a variety of loans. So it’s imperative for you to achieve and maintain a high credit score. Before we look at the effective ways for improving credit score, let us understand how CIBIL rating system works.
CIBIL calculates your credit score by taking several factors into consideration like your credit exposure, past performance, credit type and duration, and several other factors. These factors have a gradual effect on your credit rating. Your credit scorecard isn’t like a T20 cricket match scorecard where a few 4s and 6s change the complexion of the game. Instead, you have to be a consistent performer to achieve and maintain a good score here.
There are some unique ways which can give your score a lift off in a really short duration of time.
It is hard to believe that having several credit cards can do any good to you. Believe it or not, having a few pieces of plastic money (credit cards) in your pocket can do wonders for you – if you use them often and pay back your bills on time.
We told you earlier to own a few credit cards but that does not mean you have to fully utilize them every month. Try using only up to 30% of the credit limit allowed on your card. Using more than that regularly can let the authorities at CIBIL into thinking “What a spendthrift you are!”
Even though you should use your cards ways below the allowed limit but you shouldn’t shy away from asking them to raise your credit limit. After continuously showing a good performance, you can ask banks to be more generous with credit limit. Higher limit shows that your credit worthiness is high but be careful. It only works if you do not raise your spends accordingly.
The idea of cancelling a credit card may cross your mind at some stage. If you feel that you no longer need it, you should still keep it active because the motive here is to boost your credit score. The best way to keep your card relevant is to use your card for recurring expenses. Dropping your credit cards sends a negative sign to the bureau.
Your past performance makes up to 30% of your credit score. Therefore, it is important to be a clear your credit bills timely. If you have taken a loan, make sure that you don’t miss any EMI. Timely payment of your credits puts you in good books of the CIBIL authorities.
Some people think that old debts have a negative influence on their credit rating. However, if the loan was paid back in a timely manner then it reflects positively in your scorecard. So you don’t need to ask the authorities to remove it from your credit history.
It is not necessary to have a secured credit card but people with bad credit score find it difficult to get a credit card from banks. Secured credit card is the way to go if you face such a problem. Securing your card against a fixed deposit gives confidence to your lender and when you repay your credits on time, your credit score gets a boost.
We hope that you found these steps useful. Remember that consistency is the key here. High CIBIL score shows that your financial management skills are very effective. This proves greatly beneficial when you need to borrow a large sum of money in emergency. So follow the above mentioned golden rules religiously and you will soon see your score graph rising.