Your credit score is an important piece of your financial asset. If you are looking for a reward credit card, you will require holding an excellent credit score. In this case, you are looking to avail a low-interest rate on credit options, for this also you must have a good credit score. So, you must ensure to check CIBIL score for free before you hit on the credit option. Doing so allows you to beware of your credit standing and accordingly take steps to ameliorate it. To check CIBIL score online, you can need to visit any authentic website of a financial lending market. Also, there are other non-obvious areas where a strong score can help – like when you are looking to avail a job, then the employer may fetch your credit report to understand your credit behaviour and accordingly decide whether to offer you the job.
Forming a credit score is a long-term process where excellent behaviour towards credit assists you to enhance your credit score gradually. Forming a strong score can take years, however, there are certain measures you can take to enhance your score quickly. Read on to know. However, before this understand, why is your credit score important.
Why is your score important?
In the present day’s era, nearly anything can be purchased using money. Not everyone has the required funds and hence, there are distinct avenues through which you can earn or borrow funds. While there are various lending institutions and banks present today, you might assume that borrowing funds is very simple. However, factoring in the risk involved with lending, many financial institutions have set specific parameters to assess your repayment potential as a borrower.
Here’s where a credit score makes its entry into the picture. A score is an important key determinant, which is used by lenders for assessing your eligibility as an applicant. Thus, it is crucial for you as a borrower to hold a strong score. Doing so helps in the following –
- Ameliorates your chances of securing credit or a loan.
- Also, assist in fetching a better rate of interest, thus lowering your thorough loan burden, and enhancing your savings.
Thus, before you approach the lender, always ensure you hold a strong score.
Lower your CUR (credit utilisation ratio)
Various parameters determine your score. Your CUR (credit utilisation ratio) is the most influential metric as it is a necessary parameter that generally makes up 30 per cent of your credit score. Credit utilisation is basically how much credit you can use divided by the overall credit amount you can access.
Review for errors
You must ensure to dispute all errors and mistakes by approaching the credit agency site instantly post-discovery. As soon as you evaluate your report, you will be able to check out the transactions that are incorrectly stated. You must act on such disputes within thirty days and make sure to get them corrected.
Keep a constant watch on the CUR (credit utilisation ratio)
Try and restrict the usage of your credit card just for crucial transactions. This would assist in maintaining a CUR (credit utilisation ratio) of less than 30 per cent. A low CUR will ameliorate your score and ameliorate your score as this is an indication to lenders that you must use your credit in a judicious manner.
Avoid application of fresh credit instantly after rejection
In the case, you have currently applied for a credit card or loan, and it has been turned down, such info gets recorded in your report. In the case, you apply for any fresh credit or loan instantly, then your score will get impacted. An ideal measure in such scenarios is to avoid making any fresh applications and then wait for your score to get on track.
Avoid constant applications
Every time you place an application for fresh credit, lenders tend to check out your report and all such enquiries get recorded in your credit report. Such enquiries can lead to a fall in your credit score. This shows you as a credit-hungry individual and lenders assume you may not hold the potential to make your debt repayment on time.
Make repayments on time
Prioritise your credit repayments to ameliorate your score. In case you are not able to make repayments on time, you must approach your bank to discuss and solve this problem. Lenders might provide solutions, which may help to reduce your financial stress. This would assist save your score owing to delayed repayments.
Do not settle – instead aim at closing your credit accounts
There are times when credit card users approach the financial institution to request to close the debt at a lower outstanding amount than the overall due amount. Such settlements might show up on your report and negatively impact your score. Lenders would extremely be hesitant to approve credit if you show a past record of a settled account.
Borrow just when required
Your score is most likely to get impacted if you constantly borrow. Always avail a loan just when it is required and never unnecessarily exhaust your credit limit. This would require you to constantly assess your income and expenses. Prudent financial planning would assist in curbing your expenses and do not take unwanted credit.
Select a strong mix of credit
There are usually two kinds of loans, unsecured and secured credit options. In the case you use a lot of unsecured credit options, lenders view it negatively and might turn down your future applications for loans. So, it is best if you go for a balanced mix of unsecured and secured credit options. For example, credit card outstanding combined with a car loan.
How can you check your score and report the same?
Periodically reviewing your score will endow you with a strong idea regarding your credibility. Every credit report fundamentally consists of your score with details listed about your credit transactions. You can fetch your report from reputed credit agencies like Experian, CIBIL, CRIF High Mark and Equifax.