A CIBIL score is crucial for everyone, as it determines an individual’s creditworthiness and eligibility for banking services such as loans. A good CIBIL score can offer significant advantages, including lower interest rates, favourable terms, and broader credit opportunities. How to Build a High CIBIL Score: A strategic approach and careful management of your financial activities can help you maintain and improve your CIBIL score. As a result, improving their overall credit record and benefiting from the perks that come with having a strong credit score.
Maintain Healthy Credit
Regularly using credit (like credit cards or loans) and paying it back on time shows lenders that you are trustworthy and responsible with money. As a result, it helps improve your credit score. Maintain a healthy credit mix. Rather than depending upon only on credit card, you should use a mix of services, overdraft, loan, etc..
Avoid Being A Guarantor
If you act as a guarantor for someone else’s loan and they fail to repay it, your credit score will be negatively affected. So, you should only agree to be a guarantor if you’re confident that the person is financially stable and capable of repaying the loan.
Multiple Loans Should Be Avoided
If you apply for multiple loans within a short time exposes your financial instability to the lenders. This could result in a lower credit score.
Credit Card Ratio
To build a good CIBIL score, it’s important to regularly check your credit score and understand its limitations, especially before making any major financial decisions. Experts recommend keeping your credit utilisation below 30% of your total available credit limit. This demonstrates responsible credit behaviour and boosts your credibility in the eyes of lenders.
Due to Be Repaid Promptly, And Monitor Your Credit Card Activity
Timely payment of your credit card bills and loan EMIs should be your top priority. Otherwise, your score may go down. Furthermore, regularly checking your credit card statements and credit reports helps you spot any mistakes or unauthorised transactions. These issues, if left unaddressed, could negatively impact your credit score. Taking quick action to correct such discrepancies is crucial to maintain a healthy credit profile.
Opt For Longer Loan Tenures
Opting for a longer loan tenure will lower your monthly EMI (Equated Monthly Instalment), which makes it easier to pay on time. However, you will have to pay more interest overall, tbut imely payments help build a positive credit history.
