Before getting any personal loan or even a traditional loan, one thing that the lender will check is your CIBIL score. If your CIBIL score is good, then you have a likely chance of getting a home loan, car loan, personal loan for self employed, or any other loan. Even when you apply for a credit card or a personal loan, your CIBIL score will be checked first. Its value generally lies between 300 and 900, but the higher the number, the easier it is to get the loan approved. A CIBIL score of more than 800 almost guarantees that your loan will be approved in an instant. In this blog, we will discuss the things you can do to get your CIBIL score of about 800 and maintain it over there.
Credit utilization percentage
Credit utilization percentage means the percentage of your credit card limit you are using. If your credit card limit is 1 lakh and you are using more than 30% of it, i.e. Rs 30,000 or more, then it’s usually a bad idea. It’s better to get a new credit card if you are doing so. The simple reason for this is that when a bank or instant personal loan app checks your credit history and see that you are consistently using more than 30% of your credit card limit, they fall under the impression that you are mostly dependent on credit for your expenses.
This means that it’s risky for them to give you loans, and hence, eventually, it reflects on your CIBIL score as its score reduces. If you want to use more than 30% of your credit card limit, it’s better to either get a new card or increase your card limit if possible. This way, you can stay under that bracket of 30% with ease.
Don’t destroy your credit card history.
Your credit history is super important because banks or lenders and the best online loan app check it to see your creditworthiness. The longer it is, the better for you, as it helps improve your CIBIL score. So, if you have a 5-year-old credit card that is not in use much, don’t cancel it. An older credit card shows it’s credible enough for a loan, especially if you have been making timely payments. All of this helps improve your credit history and, hence, your CIBIL score.
Don’t delay payments.
Two bad things happen when you delay your loan payments. Number one, you pay a very high interest rate, and second, it highly affects your CIBIL score. So, a good thumb rule to follow is to use your credit card only when you have enough money on your debit card as well. Meaning, if you wanted, you could have paid the money through your debit card as well, but instead, you chose to pay through your credit card and paid the loan on time.
This gives banks a signal that you take a loan and pay it on time. Once you do this consistently for every small or big payment you make in your daily life, your CIBIL score will automatically start to rise. Additionally, you get multiple rewards as well for using your credit card for your daily payments.
Don’t apply for random loans.
First off, let’s talk about loan applications. Each time you apply for a loan, your CIBIL score takes a hit. It’s like a tiny chip off the block, slowly eroding your score with each inquiry. So, resist the urge to hop on every loan app for a loan. Instead, opt for easy loans and aim to pay them off swiftly. Think of it as a marathon, not a sprint. Paying in three months instead of twelve not only saves you interest but also keeps your credit history glowing.
In conclusion, tread carefully in the world of loans and credit cards. Avoid random loan applications, opting instead for easy loans apps like branch. And when it comes to credit cards, steer clear of cash withdrawals – they’re like quicksand for your financial health. With these simple steps, you’ll be well on your way to a stellar CIBIL score and a brighter financial future.
