If a lot of damage has already been done to your credit score, it can’t get repaired magically overnight. Here are 5 smart ways to boost and calculate your cibil score in the coming year.
Does your New Year’s resolution list include improving your credit score in 2019? If not yet, then this is one thing you must not miss. Having a high and healthy credit score can not only ensure that you get a loan when required but can also help you qualify for the best car financing or personal loan offer, thus resulting in big interest savings. Remember, if a lot of damage has already been done to your credit score, it can’t get repaired magically overnight. While it often takes a lot of time and hard work to get the scores right, here are 5 smart ways to maintain and boost your Cibil and other credit scores in the coming year:
1. Keep your credit utilization low
Try to use 30% or even less of the available credit limit on your credit card to refrain from damaging your credit score. But that does not mean you don’t use it at all. If you have multiple cards, a zero balance on all of your credit accounts can also impact the scores negatively. It is rather smart to pay off your balances before time and keep those balances low, but make sure your credit card issuer is ready to accept multiple payments in a month. As credit bureaus consider going beyond 30% as high credit utilization, it is best to opt for an increased credit limit that will help in projecting a low credit utilization resulting in a quick increase of credit scores. But this does not mean that the additional debt is utilized recklessly, resulting in wrecked scores.
2. Let the old debt stay on your report
Many people tend to believe that their old debt is bad for their credit report health. But even if you don’t use your old credit cards any more, they can still help your credit score. And how? A part of the credit score is determined by longevity. Keeping your old account intact will not just show an increased credit limit, a lengthy credit history will enable the lenders to acquire more information accurately to assess your creditworthiness and your ability to successfully manage your credit. So, it is an intelligent move not to close any of your old debt accounts as it will show your good repayment record.
3. Don’t apply for any new credit unless you need to
Whenever you are thinking of applying for credit, make sure the reasons are valid and upright. It could be either buying a car or simply merging the credit card debt on a 0% APR balance transfer credit card. In both the situations, the benefits of applying for the new credit makes complete sense. However, you must avoid taking credit for petty reasons like buying presents for Christmas etc. Moreover, while applying for credit, make sure you check your eligibility in different banks and apply only to banks where the chances of getting your loan applications approved are high. After all, applying for a lot of credit from multiple banks can also hurt your score. So it would be fair to keep your credit inquiries and accounts within limits, without initiating any new ones. This would help in adding some crucial points to your score.
4. Keep a tab for errors on your credit report
It is crucial to keep checking your credit report for errors every now and then as surprisingly, credit reports have the possibility of containing errors. Every credit bureau has to mandatorily offer one annual free credit report to the borrowers. In addition, online loan marketplaces like MyLoanCare.in provide free monthly credit reports to their customers in association with Experian. Keeping a tab on your reports can help you ensure that errors are reported and corrected promptly.
5. Inculcate good financial habits
While it can take as low as 1-3 months for you to start noticing an improvement in your credit score, in really bad cases it may take 2-3 years. Thus, the best possible solution here would be to alter your financial habits to avoid or minimise the chances of poor credit in the future. By changing the financial habits we mean staying within your financial means, maintaining an emergency fund, and saving for the future. That way you will never miss any payments and have a financial backup during emergency situations. By forming good financial habits while rebuilding your credit, it will be easier for you to uphold a new and better credit history.
(By Gaurav Gupta, Co-founder and CEO, MyLoanCare.in)