- HOW IT WORKS?
- Credit Score & Report
- Credit Bureaus
If it is to be decided whether your loan should be approved or not, CIBIL Score plays the dominant role and the deciding factor. Your credit history is useful in determining your CIBIL score. Usually, a credit score is dependent on the credit history and the pattern of payments that are to be made.
If you are the person who has a high credit score, you will be considered to have a high creditworthiness and if you are a person with low credit score, you will be considered to have a low creditworthiness. Having a low credit score will be a risky thing for a borrower.
Ways to Improve Your Credit Score
There are some factors that will help in improving your credit score. You need to improve your credit score if you are having a low credit score. In such a case, you need to see that you are avoiding those things that result in decreasing your credit score.
1. Regularly Checking Credit Report: It is good to keep a check on the credit report as it helps in continuously monitoring the credit related information. Firstly, it gives the details about the default payments if any, because these are primarily responsible for reducing a credit score.
2. Lower Loan Application Frequency: You need to see that you have not enquired for loans on a frequent basis in a short period of time. If you have very frequently researched for existing and new loans, your enquiry gets recorded and you will be termed as a credit hungry individual. This will again lead to a reduction in your credit score.
3. Cautious in Credit Card Applications: It is better to avoid applying for a credit card if your loan application has been rejected recently. If your loan application has been rejected by one bank and you have approached another bank for the same loan, then you will notice that your information has been recorded. This will result in your loan application being rejected by the other bank also. Therefore, you will have a low credit score. Thus, try to avoid this kind of situation.
4. Timely Loan Payments: It is advisable that you do not make any delay in the payments that are related to your loans. In case you are unable to pay your EMIs, you can request for a restructuring of your loan. This way it will become easy for you to make the payments.
5. Timely Payment of Credit Cards: It is a good option to make your credit card payments at a proper time. You should avoid reaching your credit card limit.
6. Don’t Opt For Settlement: It is advisable to not go for loan settlement as it reflects the credit report and credit score in a negative manner. Loan settlement should not be done as it affects the credit score in a negative manner thus resulting in reducing your credit score.
7. Minimum Borrowing: It should be seen that the borrowing you have opted for is a minimum amount. The more amounts you borrow, the more difficult it becomes for you to repay. So it is better that you avoid taking huge amount as a borrowing.
8. Mixed Credit Structure: You should go for a proper mixture of loans i.e both unsecured as well as unsecured loans. More of unsecured loans will lead to a negative impact on your credit score. A proper combination of the loans will help you in maintaining a good credit score and this will improve your creditworthiness.
9. Avoid Joint Loan Accounts: In the case of such loan accounts, you will face problems even if you are not the person who has defaulted on the loan. If the person who has taken the loan jointly with you, you will be held responsible for the same. It is always advisable to avoid such a situation as this will lead to a decrease in your credit score.
10. Create Credit History: If you do not have a credit history and you have been taking a loan for the first time, you will not have any credit history. In such a scenario, the banks will not approve your loan request easily. The best thing to do in this scenario is to open a fixed deposit and take a credit card for it one. Finally, by making proper payments on these credit cards, you can improve your credit score.
11. Use All Cards Equally: Using only one card will be a loss for you in terms of credit score management. It is advisable to make use of various cards that you hold. You need to segregate the usage of the credit cards in an appropriate manner such that it will not result in any burden on any particular card.
12. Avoid Unnecessary Disputes: It should be taken care that you are avoiding disputes with the lending authorities if you have been asked to pay penalties for late payment. If such dispute has been raised, your credit card companies may freeze your cards and this will lower your credit score.
Illusions about Factors Affecting Credit Scores
1. Details of Your Bank account: It is believed that the bank account details will impact the credit score, whereas this is not true.
2. Your Address – The place where you have been residing does not play any role in affecting the credit score.
3. Rate of Interest: This detail is also not one among the factors that affect the credit score.
Factors that negatively affect your credit score in a Negative Manner
There are various factors that lead to lowering the credit score. These points are discussed below
1. The amount of debt that is taken by you
2. The defaults on frequencies of the Payments made by you.
3. Loan types are chosen by you
4. New loan requests
5. Optimum Utilization Of Credit Limit
A good credit score is always what every individual desire. You can work on improving your credit score if you are aware of all those factors that help in the improvement of credit score. It is good to maintain your credit score so that you are not facing any troubles in your financial future. Creditseva is one such advisory firm that helps you in improving your credit score and also closes bad loans so that you are in the good books of your lender.
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