Let’s face it: getting a loan happens to be one of the most important aspects of a person’s financial experience, since they help us to make significant transactions that have the ability to qualitatively alter the very quality of our lives. However, loans are not a thing that would be handed over to you just because you’re a regular customer of the bank. Since the amount loaned is actually money borrowed from the bank, it is your job to pay it back within the stipulated time period, along with the interest accrued over the repayment period.
The first thing any bank or financial institution would do is to check your credit score in order to determine the eligibility of your loan application. Your credit score is nothing more than a score assigned to you on the basis of how much you are financially trustworthy and how much you are capable of repaying the loan amount. Technically, it is a three-digit number that summarizes your entire credit history, by CIBIL (Credit Information Bureau, India Limited), on the basis of monthly information provided by banks and financial institutions having the authority to issue loans.
The scale of your credit score is fairly easy to measure: tabulated between the scores of 300 and 900, credit scores are assigned to individuals or organizations on the basis of how much trust does a bank or a financial institution has on them. A credit score of 900 and above would indicate that the person or organization applying for a loan can be trusted with having the loan and repaying it back, along with the rate of interest that had been charged. Such a credit score is highly desirable since it gives you access to any kind of loan from any institution since they have the faith, based on your credit score, that you’d honour them by repaying the loaned amount as soon as possible. On the other hand, a credit score of 300 or less is, well, pretty undesirable since this reflects your inability to pay back the loan and shows how mismanaged your fiscal affairs might be. Banks or financial institutions will not issue any loans to you if you have this particular score. Scores between 300 and 900 display – on a spectrum – the varying degrees to which variously rated individuals or institutions are able to fulfil financial commitments as far as loans are concerned.
If you have an abysmal credit score or somewhere between the undesirable and the ideal, you might be wondering that if there is indeed a way to improve your credit score or not, the good news is that you can improve your credit score. By following these steps listed below, we are pretty confident that you would be able to greatly improve your credit standing and be able to build up the trust and rapport necessary for having the accessibility to loans whenever and wherever you might have the need for using them:
1. Pay Up Early: It is always wise to unburden yourself as soon as possible. Banks or loan issuing institutions always value a customer who is able to repay their due amounts early and clear all debts regarding both the loan and the interest on it. By fulfilling your fiscal commitments on time, you are actually helping your CIBIL score to grow, based upon the timeliness with which you tend to honour your obligations.
- Pay It In Full: Try to keep your expenses low, especially when you are using your credit card. In order to be successful for a credit card eligibility check, you must learn the techniques and methods of judiciously using your credit card. One such trick includes opting for full payment rather than minimum payments on your credit card. This would enable you to expand your credit score and it would make it easier for you to apply for a credit card in the future.
- Have A Good Mix: It’s always preferable to have a mixed sort of loans in your belt, if ever you need to apply for multiple loans. Ideally, you must strike a balance between secured loans (home loan, car loan) and unsecured loans (credit cards, personal loans and the like). The trick is that the less number of unsecured loans you have, the more would your CIBIL score increase. It’s really an inverse relationship between unsecured loans and your credit worthiness.
- Don’t Trouble the Double: Things tend to become difficult whenever there is a joint account involved into the equation, requiring extra vigilance and more discipline to be observed. Be careful and avoid any action that might result in your joint account holder or your co-applicant from defaulting on the loaned amount, since that would be surely reflected on your own credit score.
- Check Your Credit Limit: It is very essential that you keep your expenses down and or in control, especially when using a credit card. If you end up overspending too much on your credit card and if you ask your credit limit to be increased every time, then chances are that your credit score would go down as financial indiscipline will cost you your credit worthiness. So contain your expenditure and automatically, the requirement for extra credit would be diminished.
So these are some of the ways by which you can hope to improve your CIBIL score, provided that you follow each step to the letter. It is our earnest hope that these steps provide you the help with which you can get to have the most out of your financial assets.
If you have any more queries or if you want to know more about how to apply for a credit card or how eligible you are for a credit card, then please be sure to visit www.chqbook.com/credit-cards for more details and for comparing prominent credit cards in order to settle upon the one that works best for you and for those who depend upon you