Having a low cibil score while applying for a loan is a big hindrance for you in the process of getting a loan or a credit card . A credit score is one of the initial things that every borrower considers before giving a loan to applicants . A good credit score shows that you are a financially strong individual . However , a good credit score doesn’t mean that you have a low credit score, instead it leads to having a low credit score.
One of the great needs for credit is that you will need a home loan to get your dream home or a car loan to get your first car, as a low credit score will definitely result in the rejection of your loan application. As having a healthy score is a matter of due diligence and disciplinary financial behavior.
If you are one who are not happy and doesn’t have a good credit score, here are some steps to reduce your burden of a low CIBIL score.
Reduce Your Burden of Low CIBIL Score
Finding Your Present CIBIL Score
If you find out your current CIBIL score in order to set off on the path of rectifying it. Every individual will have the right to see his/her CIBIL credit score at least once a year that confirms his/her financial health. Hence, credit Information should be requested on the CIBIL website. You will be required to submit your KYC through many online resources . Your application will go through an online authentication process, also you can post your CIBIL score that will be provided to your registered email ID. Also, now you can just then download the scores quickly.
Change Your Credit Behavior
After you know your CIBIL or credit score is low, you should be open in changing your credit behavior. This stage begins with being proactive in correcting your score only if you go below 750. In order to rectify your credit behavior you have to accept some of the things you have been doing that might have led to a wrong or low credit score.
If These Are The Account Information Pertains
Ensure that your account is following this information given in the Credit Information Report , and they are accurate-
- Provide Bank details.
- Loan
- Credit Card
- Your information.
- Every status of accounts.
- Past due in each credit card and loan you have availed.
- Written off remarks.
- Settled flags remarks.
The number of days a payment is due on an account in every month. All these remarks indicate that your past defaults and you have a low credit score.
Identify What Went Wrong
A CIBIL score or credit score comes handy as it will point out all the mistakes . Therefore , if you learn to read your credit categorically information . Then you will be able to search out where and how many mistakes you listed out. Ensure to check all the account information before you can find out your credit report’s fault lies.
Fault In A Report
There can be various discrepancies in the process of reporting your provided information to CIBIL. Every error can, will affect and lower your score. If you are looking forward to rectifying it then you can also report to concerned authorities in the CIBIL bureau as they will raise a dispute at the earliest. After that the dispute is raised within 30 days stipulated time for the dispute to get resolved
Also Read: Alert! These Mistakes Can Reduce Your CIBIL Score!
Faults In The Report Could Include Any of The Following
Your overall account balances
Your overdue amount after you have repaid your loan
Closed loan account will also appear in your Credit Information Report
Identification of theft
Information about your of a loan that you have not availed at all
Improving Your Score
After you have your mistakes displayed, building a new plan to get a good cibil score can help. Searching for ways to pay your unpaid debts the outstanding amounts or even non settled amounts. In case any of these amounts are not yet paid then your credit score will continue to stay low.
In some cases, scores can improve even with the existence of unpaid debt. But in that case, your lenders will need to take your situation into consideration against the unpaid credits when you are planning to appraise your loan application.
Talk To Your Creditors
A well planned strategy to understand your credit score is by speaking it to your creditors and coming to a final understanding of ways how you can clear your debt. However, discipline, diligence and cutting corners will also help you to pay off all your debts.
The Checklist
This are some of the checklist that you should mark after you have achieved your elevated credit score to a digit 750 or more –
- Keeping overdue balances and low on your credit cards is necessary
- Continue doing timely repayments for your credit cards and loans
- Maintaining a good and secured along with unsecured credits
- Wise choices that you should take in future loan applications
Many corrective measures improve your credit score as it is not set in stone. However, maintaining a good CIBIL score will make your status creditworthy. Not only banks and financial institutions but the employers also monitor your credit scores to your future employees. Hence, it also holds you in a good position to keep a constant eye on your credit score that shows your financial behavior of maintaining high scores
Also Read: Top 5 CIBIL Score Improvement Factors
Practical Ways To Improve Your Credit Score
Pay Bills
With paying bills we meant that you should not only pay it but pay in time with any delay . You can also avoid delays as much as possible as it can easily reflect on your credit score.
Spike The Credit Limit
The easiest process to lower your credit score is by request from your credit card provider to increase your credit limit. After increasing your credit limit, you should not only have about 30-40% but you should responsibly handle it.
Never Close Old Accounts:
Remove your old account after it negatively affects your credit score and deletes your good credit history. The records of payment should be in your report as they help in improving your score.
Credit Score Monitoring:
Ensuring that your credit score is in good position should help you in stating your credit status that will eventually give you an opportunity to work on it.
Abstaining From Too Much Credit:
It is very common to receive calls and emails from various financial institutions offering free credit cards. Many times , we believe that owning multiple credit cards will make our life easier. But balance transfer and other card benefits should help you make our life financially flexible.
However,there are many people who do not understand that owning too many credit cards will make them look bad and as such lowers their chances of receiving additional credit when it is actually required.
Hence, multiple credit cards makes it difficult for a person to check payment due dates and as it will enhance the chances of default and late payment.
Right Use of Credit Cards:
Using credit cards is a great financial tool to own. You should have enough credit to fulfill your necessities that will make you avail exclusive benefits too, like reward points and air miles. However Credit cards also help you. But , all these kinds of benefits work after you apply and use these cards wisely and optimally. You unknowingly going a bit beyond your credit limit each month is a bad move.Hence, also closing a credit card without knowing isn’t a good idea because you can reveive a NOC your lender.
Secured And Unsecured Loans A Right Mix:
Secured loans like home loans, are more inclined towards asset creation and impact your credit score positively. Also, applying for an unsecured loan can help you increase your credit activity . Hence, you have to lessen the component of your credit portfolio to influence your credit score positively.
Also, some sort of banking terminology can make repeated use of the terms CIBIL score and CIBIL report; especially when you are searching to seek credit from banks. Both these terms are somehow inter-related and will affect your credit status. CIBIL score as well as CIBIL report are also analyzed by banks, even before they lend any credit to customers.
A Guide To Manage Your Finances
Sustaining your finances should be given utmost importance for anyone. It enables you to achieve goals as well as have a life of peace. But sometimes unknowingly, in spite of giving it your best, you end up messing up finances and that can lead you in trouble in life as well as while applying for a loan or credit card. However , here are the few aspects that can definitely motivate you to have control on your finances.
Planning your Budget:
You have to be realistic as well as grounded especially when it is about managing your finances. Spending wisely as per your monthly salary is necessary to prevent the risk of being in debt. Also if you are planning to shop make a list of items to figure out whether buying it or questioning if spending that much amount will be feasible. All these precautions can only help you to increase your savings.
Validate Credit Report:
Tracking credit reports once a year is important. And availing your CIBIL report or subscription report will enhance your credit score dramatically. Credit reports usually outline all the factors in detail and what is increasing or diminishing your credit score. So, knowing your faults will avoid repeating them and result in having a good credit report. However, you can also avail the free CIBIL score to know your present financial position.
Pending Amounts:
Reducing paying all the bills on time is necessary as it will prove to be positive for your credit report. Clearing any outstanding amount on a monthly basis reduces the burden in future months. This will boost your financial position.
Upgrade Knowledge:
Everyone wants to upgrade their savings, but are not sure about the points that can dramatically impact one’s financial hold. A good credit report, interest deductions, and knowing factors that boost your credit score can really help the credit score to go up.
Also Read: Difference Between Credit Score and CIBIL Score
Summing Up
CIBIL scores are one of many factors considered by lenders. Your CIBIL score is the only indicator of your credit-worthiness, however, lenders also like to look at factors that prove stability. Those are your work experience, and number of years with your current employer, who your current employer is, along with savings, etc. are all factors that come under your eligibility and eventually the effects of the interest rate on your loan. You can also talk about your bank giving you a better rate of interest by negotiating skills and can convince them that you are an ideal loan applicant and that they will have no problem getting the loan amount from you. A good CIBIL score will be a bargaining factor for a negotiation process. Hence keeping it in the ideal position is necessary.
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