Wednesday, 14 September 2016

3 simple steps to enhance your credit score

A credit score is a three-digit numeric summary of a person’s creditworthiness. The score will range from 300 to 900, and the closer it is to 900, the better. Most banks and financial institutions will only take into consideration applicants holding a score of 750 and above. It is thus very important to try and enhance credit score so as to improve chances of availing credit to one’s liking. At a minimum, you must check your CIBIL score two times a year. Knowledge about your score not only gives you an idea about what your creditworthiness looks like to financial institutions, but will also help you realize if you have fallen victim to identity theft.

How to check your CIBIL score?

If you wish to do CIBIL score check, the first thing you would need to do is visit CIBIL’s official site and fill in the CIBIL online score request form. You would be asked to fill in the kind of subscription and your personal details such as email address, date of birth, gender and PAN number. Once you have entered all the details, the site will direct you to the payment page. This is the second step to checking your score. The payment can be made via net banking, debit credit or cash card. After you have made the payment, you will be asked to submit authentication details. You would have to answer three to five questions on your credit cards and loans. And once this third step is successfully completed, you will receive your score in a matter of some hours via email.

If you are unable to complete the online application process, you can send a printed application to the credit bureau. Here, you would have to attach a copy of your ID and address proof to your printed application. After verification, the credit bureau will send you the printed copy of your report. With the credit report, you can view the number of loans reported against your name, accounts that have been settled or written off etc. If you do find spot any discrepancies, you can raise a CIBIL dispute and get the error rectified. Keep in mind that your focus should to enhance credit score. A poor score will tarnish your image among financial institutions and can cause lenders to turn down your application almost immediately. In order to keep from happening, let us look at some measures on how to increase your CIBIL rating.

How to increase your CIBIL rating?

It takes time, effort and systematic planning to enhance credit score. The first step you can take to increase your rating is ensuring timely payment of bills. For instance, if you are making payments through cheques, it is advisable to drop it off few days before the due date so as to avoid late payments getting recorded in your report. Making sure that loans are repaid on time and in full is one of the ways on how to increase your CIBIL rating.

Another solution to how to increase your CIBIL rating is by maintaining a healthy credit mix. If you hold too many unsecured loans, it will reflect poorly on you. In case you want to hold multiple loans, it is advised that you maintain 70% to 80% in secured loans and the remaining in unsecured. It is also very important to avoid portraying a credit hungry behaviour. Do not send out too many loan applications at the same time as this causes the lending institutions to make credit inquiries together. And every time a credit inquiry is made, your credit rating will take a beating.

One of the other ways to enhance credit score is by keeping the credit utilization low. It is calculated by dividing the credit you are using to the credit you have available. When the credit utilization rate is high, your CIBIL rating will come down. On the other hand, when the ratio is low, your score will rise. You can also take the assistance of a credit advisory company to help you enhance credit score. A credit advisor will counsel you on how to increase your CIBIL rating, credit repair and avoid bankruptcy, among other things. They will help you to create an action plan that is aimed at boosting your score and improving the credit profile.

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