A good CIBIL score means that the borrower has a good repayment capacity, which increases the chances of loan sanction and also means that the terms and rate of interest will be far better. Your CIBIL score helps lenders assess your creditworthiness; hence, it is an important factor when joining a personal loan app in India.
1.Pay Your Bills on Time
This is a critical factor that determines your CIBIL score, and therefore, the timely settlement of bills is vital. If you have delayed and paid your bills very late, your score will certainly be affected. Arrange to receive alerts before your payments are due, or set up automatic payments so you do not forget the due date. Failure to pay bills for some time shows that one is not a responsible person, while on the other hand, paying them on time is an advantage and contributes to the credit standing.
2. Reduce the Credit Utilization Ratio
The utilization rate is the extent of credit that you are currently utilizing concerning the available credit. Credit utilization accounts for 30% of the credit scoring model; therefore, ensure the ratio does not exceed 30%. Clear the previous balance, and do not charge your credit card to its limit. The lower the credit utilization is, the more proof you give to the credit lenders that you can handle credit well.
3. Monitor Your Credit Report Regularly
One must review credit reports frequently to search for inaccuracies that have a bearing on the CIBIL score. Scan the data between your original information, account data, and payment history for mistakes. If you notice any problems, you need to engage the credit bureau to adjust and correct them.
4. Maintain a Mix of Credit
Credit accounts like credit cards, loans, mortgages, etc. should be diverse, and this also has a positive influence on the CIBIL score. However, do not create multiple accounts on time because it will seem like you are a high risk to lenders. Apply for personal loan or credit cards wisely when the need arises to create a good credit score.
5. Avoid Closing Old Credit Accounts
One may think of closing their old credit accounts, but this is not advisable as it contributes to lowering the CIBIL score. The length of credit history is acknowledged to be one of the significant factors bureaus take into account. Maintaining a credit card account, even if you do not frequently use it, illustrates a good credit history. However, avoid accumulating unpleasant and avoidable charges on such accounts.
The tips discussed above can help in a big way to improve the CIBIL score of an individual. It is important to note that this process cannot happen overnight, but with diligence, it can begin. They must also make sure they only borrow money from a personal loan app in India when they are sure that they will pay back the amount with interest and borrow wisely.
