A Credit score is very important for getting any type of loan and cards. It is the three-digit number ranges from 300-900, generated by a mathematical algorithm using information in your credit report. The Credit Information Bureau India Ltd is popularly known as CIBIL. It is the authorized credit agency of Reserve Bank of India (RBI). To get a perfect credit score, you must have a high level of financial responsibility, 850 is the highest achievable level of creditworthiness. A credit score represents the creditworthiness of an individual. A higher credit score suggests that the customer have good credit history and borrower will repay the monthly installments. On the other hand, lower credit score depicts that the borrower is not trustworthy, may not repay the EMIs. Currently, almost all the banks and Non-Banking Financing Companies (NBFCs) calculate a free credit score. Online aggregators also calculate a free credit score for you.
Tips to achieve the highest credit score
Check credit score on a regular basis
You should check your credit score regularly. It will give you an idea regarding your credit status. You can monitor your credit score by applying on the websites of online aggregators or you can visit your nearest branch and ask for a CIBIL report. Another most important reason for a regular checking of credit score is to check whether there are any errors or false records about your credit account.
Avoid over limit credit utilization
You should always avoid excess utilization of credit limit. Make sure you should not use entire credit limit. It is advisable not to spend over 50% of your credit card limit until your credit score reaches to 750.
Pay your due on time
You have to pay all your dues on time because late payment results in lowering your credit score which badly affects your credit score, even if your dues are a few days late. You can do one thing if in any case you are not able to pay any your dues in any month, you can ask your lender to help you in restructuring the debt to make it easier to pay.
Avoid multiple loan enquiry
If you have applied for a loan or a credit card and your application is rejected, the information will be recorded in your credit report. If you go and apply to another bank immediately then they will result in a low score and the previous rejection and may reject your application. The best thing you can do in such cases is to not apply again and wait for the score to improve.
Never settle any loan or credit card
Many people opt settlement of loan if they are not able to repay the loan. Settlement of a loan amount means borrower ask for a deal that will allow them to close the debt for an amount that is lower than the actual amount due. Loan settlement badly affects your credit score. No lender lends you money after the settlement of loan because settlement depicts that the borrower will not be able to repay the loan in near future.
Above all are the tips which help in improving your credit score. By following that your credibility may increase and you can easily avail any loan or credit card from any bank or NBFC.