Watch Your CIBIL Soar With These Simple Things
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Did you know that with a high credit score, you may get lower interest rates when availing a loan?
Banks and NBFCs in India provide unsecured loans only to those who have a credit score or CIBIL score of 750 or above. You may be able to avail a loan with a low score, but the lender may charge higher interest rates.
Those who want to improve their credit score above the 750-mark must avail small loans and repay them responsibly without raising any red flags.
However, if you have a low CIBIL score, you may not be able to afford a loan to improve it. So, the ideal alternative here is to get a best credit card.
A majority of lenders provide credit cards to those that have a low salary or minimal credit history. By availing a card, you can get improve your credit score and become more creditworthy.
However, your CIBIL score will not improve just by getting a card. Here are a few steps that you need to follow to increase your score:
1.Use the card
Getting a card and not using it at all will not improve your CIBIL score. Such actions will make the card inactive and may lower your score.
So, ensure you use the card from time to time and also, take advantage of its various features. Further, never surrender an old card – the longer you use it responsibly, the more positive effect it will have on your credit score.
2.Pay the bill on time
Similar to your electricity bill, you will also have to pay your credit card bill in time. Companies provide a period of up to 50 days to clear your outstanding dues, so you get ample time.
They will charge high interest if you fail to pay your bill within the due time. Moreover, it will also bring down your credit score.
3.Never utilise the full credit limit
The credit limit is the maximum amount that you can spend on the card. However, it is recommended to refrain from utilising the total limit. Doing so will make you credit hungry and lower your credit score.
Generally, you should keep your transactions within 30% to 40% of your credit limit.
4. Ask for a credit limit increase when utterly necessary
You may ask your lender to increase your credit limit for which, they may charge you an additional fee. Also, it may affect your credit score negatively as it is one of the factors for labelling you as credit hungry.
In addition to the above 4, you should:
5. Never make too many applications for credit cards
With each application, the company will inquire about your credit score and credit history. When a lender makes such inquiries, the score goes down. Thus, multiple applications will lower your CIBIL score.
6.Stop repeatedly applying for a card after getting rejected
If your credit card application gets rejected, it impacts badly on your score. Further, the company will add the cause of rejection in your credit history. When you apply for another card, the new lender will come across this refusal and reject your application.
Thus, when rejected, wait for a few months and then approach a company for a new card.
Follow these steps mentioned above to use your credit card and improve your credit score wisely.
Not Sure Which Cards To Apply For? Consider these from CreditSmart’s Best Cards of 2018.
- For India, The Time to Get Your CHIP Card Now - 14/10/2018
- Co-Branded Credit Cards Mean Big Savings on Travel - 07/10/2018
- Maxing Out Your Credit Card Means Minimizing Your CIBIL Score - 01/10/2018
- Kotak Bank Loan Error on CIBIL Report, What To Do? - 23/09/2018
- Ask CreditSmart: Was My Axis Bank Credit Card Approved? - 16/09/2018