If you have spent quite some time running from lender to lender trying to get a loan approved, but have been coming up short, it could be because your CIBIL score i.e. Credit Score isn’t all that it should be!
Low credit scores tend to reflect poorly on your ability to make regular repayments, making financial institutions wary. Even if you have just started working or have no credit cards or loans and therefore, not any credit score of note, there are some things you can do to get your score up.
A good credit score is above 750 and anything above 800 can be considered as an excellent score. If your score is near these numbers, lenders will be very excited to approve your loan or credit card applications. What a good credit score represents is your payment habit and that you can be depended upon to make all repayments on time; and while the credit score is not the only thing that makes a difference to your loan application, it certainly has an important role to play.
If you have a credit card or a loan, being disciplined with your repayments is the most obvious thing that you should be doing. Consistency in repaying EMIs or making credit card payments has the strongest impact on your credit score; and missing out on payments or failing to clear dues can adversely affect your score.
Even if you always clear outstanding dues on time, you cannot go berserk with your credit card. Keep the ratio of utilization of your credit card below 30% of the limit if you are serious about raising your credit score. This practice shows that you are responsible with your funds and therefore less of a credit risk.
A combination of secured and unsecured debts will help you increase your credit score. You will of course need to make regular payments, but you cannot have a credit score without this debt portfolio. An example of a secured debt is a car loan and that of an unsecured debt is a credit card.
Banks and lenders want to know that you are not a credit risk over the long term and for that they will also look at how long you have held on to credit cards. Even if you pay all your dues, it is worth your time to hold on to the card. You can use it to keep making small payments and clearing the dues. In the same way, longer repayment tenures for loans that have been met on time also show that you are creditworthy. Foreclosing your loans or cancelling your credit cards will not help maintain a good credit score.
All you need to do is to keep these tips in mind and to remember that a good credit score is mostly about focus and discipline. If you work on it, your credit score will be in the green in no time at all.
We are India's No.1 - Most Trusted Financial Services Brand, according to the Brand Trusted Report, 2017 & 2016 consecutively. We are also the largest Gold Financing Company in India in terms of loan portfolio, according to the 2015 update to the IMaCS Research & Analytics Industry Reports, Gold Loans Market in India, 2015 ("IMaCS Industry Report, (2015 Update)"). We provide personal and business loans secured by gold jewellery, or Gold Loans, primarily to individuals who possess gold jewellery but could not access formal credit within a reasonable time-frame, or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements.
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