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7 Tips how can i increase my credit score in india
Introduction Having a good credit score is essential when it comes to borrowing money in India. A credit score is a numerical representation of your creditworthiness, and it plays an important role in determining whether you can get a loan and what terms will be offered to you. If your credit score is low, don’t worry – there are several steps you can take to improve it. In this article, we will explore various strategies and habits that can help you raise your credit score and improve your financial health. how can i increase my credit score?
Understanding Your Credit Score
Before considering ways to improve your credit score, it is important to understand how credit scores work in India. TransUnion CIBIL, a credit bureau in India, generates credit reports and assigns credit scores ranging from 300 to 900. The higher your score, the better your creditworthiness is considered. Here are the details of the different credit score categories:
CIBIL Score Rating Range: 300-500 Poor 550-650 Average 650-750 Good 750-900 Excellent Now that we have an understanding of credit scores, let’s explore strategies to improve them.
| Credit Bureau | Website | Contact Info |
|---|---|---|
| Credit Information Bureau India Ltd (CIBIL) | www.cibil.com | 1800-258-5986 |
| Equifax Credit Information Services Pvt. Ltd | www.equifax.co.in | 1800-209-3247 |
| Experian Credit Information Services Pvt. Ltd | www.experian.in | 022-6641-9000 |
| CRIF High Mark Credit Information Services Pvt. Ltd | www.crifhighmark.com | 020-6707-0900 |
1. Set Reminders for Payment and Be Disciplined with Credit
One of the most important factors that impacts your credit score is your repayment history. Late or missed payments can significantly lower your credit score. To avoid this, it’s crucial to maintain discipline when it comes to paying your EMIs (equivalent Monthly Installments) on time. Setting reminders for EMI payments can help you stay on track and ensure timely repayments. By consistently making payments on time, you can gradually improve your credit score. How can i increase my credit score?
“Repayment of your outstanding loan can have a significant impact on your credit score.”
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2. Maintain Older Credit Cards to Lengthen Credit History
If you have old credit cards, it is advisable to keep them active as long as you are able to pay your bills in full and on time. Retaining old credit cards helps build a solid and long credit history, which is beneficial for improving and maintaining a good credit score in the long run.
“If you have old credit cards, you should keep them as long as you can pay your bills in full on time.”
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3. Customise Your Credit Limit
Your credit utilisation ratio, which is the amount of credit you have used compared to your total credit limit, has a significant impact on your credit score. It is advisable to limit your credit utilisation as per the allotted limit to maintain a healthy credit score. If you feel that your credit utilisation is high, you can approach your lender to customise your credit limit based on your expenses. By keeping your credit utilisation low, you can make a positive impact on your credit score. how can i increase my credit score?
4. Opt for a Longer Tenor When Taking a Loan
When borrowing a loan, choosing a longer tenor for repayment can help improve your credit score. A longer tenor results in lower EMIs, making it easier for you to make timely payments. By avoiding defaults, delays, or skipped EMI payments, you can demonstrate responsible credit behaviour and boost your credit score.
“While borrowing the loan, try to choose a longer tenure for repayment. This will ensure that your EMIs will be lower so that you can repay on time.”
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5. Avoid Taking on Too Much Debt at once.
Taking on multiple loans within a short period of time can negatively impact your credit score. It indicates that you may have insufficient funds to manage your debt obligations. Instead, focus on repaying one loan before taking on another. Successfully repaying a loan can boost your credit score and demonstrate your ability to manage credit responsibly. How can i increase my credit score?
“The number of loans you take in a given period should be minimal. Pay off one loan and then take another to avoid hurting your credit score.”
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6. Check your CIBIL Report for mistakes and rectify them
It is essential to regularly check your CIBIL report for any errors or discrepancies. Mistakes on your credit report can have a negative impact on your credit score, so it’s important to identify and correct them. In case you find any incorrect information, you can submit the CIBIL Dispute Resolution Form online to rectify the errors. By ensuring the accuracy of your credit report, you can improve your credit score. How can i increase my credit score?
“In some cases, CIBIL may make mistakes while updating your records, note incorrect information in your report, or delay in filing the details. This will also lower your score.”
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7. Create a credit history by Choosing Different Forms of Credit
If your credit score is low because of a lack of credit history, it’s important to start building it. Borrowing a healthy mix of secured and unsecured loans of varying tenors can help you establish a strong credit history. This, in turn, will improve your credit score and enable you to avail loans at better interest rates in the future. How can i increase my credit score?
“If you have not borrowed money in the past, you will not have a credit history, and as a result, your CIBIL score will be low.”
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Improving your credit score is a gradual process that requires discipline and responsible credit behaviour. By following the strategies mentioned above, you can take proactive steps towards increasing your credit score in India. Remember, improving your credit score can take time, so be patient and consistent in your efforts. A high credit score will not only make it easier for you to avail loans but also open up opportunities for better terms and financial stability.
Remember, your credit score is a reflection of your financial health, so it’s important to manage your credit responsibly and make your payments on time.
So, start implementing these strategies today and watch your credit score improve over time! How can i increase my credit score?
