10 Assured Quick Fix Workarounds To Boost Your Credit Score

TransUnion CIBIL is one of the four credit bureaus generating reports related to Credit Score in India. CIBIL score ranges between 300 and 900. The closer the score is to 900, the better it is considered. While a score between 300 and 549 is considered poor, anything from 550 to 700 is considered fair. 

In this article, we have jotted down the 10 most important factors that directly or indirectly make an impact on your credit rating. Individuals whose Credit Rating has already taken a toll can take conscious measures to improve it. If you keep at it, you can easily improve your CIBIL score over time. Take a look at 10 such remedies that will help you improve your CIBIL score.

 

1.   Pay Off Your Debt

⇢   First and foremost, pay off the debt that pulled down your Credit Score. Any unpaid loan EMI or an outstanding Credit Card balance hits your Credit Score drastically. Contact the lending entity and come to a settlement, i.e., ask for a waiver in Interest Charges and Financial Charges. Many a time, if requested, the lending entity can convert your accumulated outstanding dues into EMIs to ease your burden. Once you pay off the dues or at least start paying off the EMIs diligently, your Credit Score starts taking a better shape.

2.   Get a Secured Credit Card

⇢   In case you do not hold any Credit Card or if your Credit Cards have been blocked due to your hard-hit Credit Score, getting a Secured Credit Card is a good idea. You can easily avail of a Secured Credit Card against a nominal Fixed Deposit and start using it earnestly. Making timely payments on your Secured Credit Card will definitely put a smile on your Credit Score.

Note: Availing off the latest Kotak Mahindra 811 DreamDifferent Credit Card against an FD as low as Rs 15,000 is an excellent idea. Moreover, the procedure is simple and absolutely contactless. Thank me later.

3.   Keep an Eye on Your Credit Utilization Ratio

⇢   Maxing out your Credit Card limit portrays you as a credit-hungry borrower in the eyes of a lender; hence, do not use your Credit Card for everything. It is better to keep your credit utilization ratio up to 30 percent or lesser. By doing this, there will be a positive impact on your Credit Score. Keeping your monthly balances low will reflect a healthy CIBIL or Credit Score. However, if your requirement exceeds 30% of your credit line utilization, refer to point 4.

4.   Increase Your Credit Limit

⇢   Never say no if your bank asks you to increase the credit limit of your card, or you can also ask your bank for this increase. It does not mean that you are going to spend more money every month; instead, you will have to be smart about managing your expenses. The simple trick is to have a lot more credit and keep your utilization low to leave a positive impact on your score.

5.   Try Maintaining a Healthy Credit Mix

⇢   It is always advisable to have the right mix of unsecured loans like Credit Cards, personal loans, and secured loans like auto loans, home loans.  An individual with a higher number of secured loans is preferred by the lenders, and the bureaus also give a good Credit Rating to them. If you have a higher number of unsecured loans as compared to the secured ones, try prepaying your unsecured loans to maintain a healthy mix.

6.   Avoid Taking on Too Much Debt at One Time

⇢   The number of loans you take in a fixed period should be minimal. Repay one loan and then take another to keep your Credit Score from crashing. If you choose multiple loans at once, it will show that you are in an unforgiving cycle where you have insufficient funds. As a result, your Credit Score will fall further. On the other hand, if you take a loan and repay it successfully, it will give your Credit Score a boost.

7.   Don't Close Unused Credit Cards

⇢   Keeping unused Credit Cards active as long as they do not cost you money in annual fees is a smart strategy, because closing an account may increase your credit utilization ratio. Owing the same amount but having fewer open accounts may lower your Credit Scores. Moreover,  a sound Credit Card or a loan account that you have managed well with timely payment is a boon. It gives the much-needed longevity to your Credit Score, which is one of the factors that lenders consider while evaluating your application.

8.   Don't Apply for Too Much New Credit, Resulting in Multiple Inquiries

⇢   Opening a new Credit Card can increase your overall credit limit, but the act of applying for credit creates a hard inquiry on your credit report. Too many hard inquiries can negatively impact your Credit Score, though this effect will fade over time. Hard inquiries remain on your credit report for two years.

9.   Opt for a Longer Tenure when You Take a Loan

⇢   When borrowing a loan, try choosing a longer tenure for repayment. This will ensure that your EMI is low, and so you can make payments on time. When you don't default, delay, or skip paying EMIs, your Credit Score will improve.

10.   Avoid Being a Guarantor or Joint Applicant

 

⇢   This is actually a situation where you could suffer even if you are not at fault end. In such a scenario, if you are the joint applicant or a guarantor for a loan someone else has taken, and they have defaulted on payments, then you too will lose out in your CIBIL or Credit Score as it will reflect in your report also.

To summarize, you might also want to dispute errors immediately with the Credit Bureau Company after reviewing your Credit Report or if you disagree with a particular transaction made through the vendor. Mistakes happen; lenders can also cause errors at the time of data entry. Any financial institution must act on those disputes within 30 days. Once the error is resolved, it will show improvement in your score. And most importantly, to avoid all the workarounds as mentioned above, PAY YOUR BILLS ON TIME.

Comments/Feedbacks are appreciated. Thanks for reading!