A good CIBIL score ensures credit facility at a lower interest rate for a borrower. CLBIL score is an important metric that is used by financial institutions to check when they receive a credit request from individuals. Every time an individual applies for a loan or a credit card, the recent CIBIL score is checked. According to ClearTax, any score above 700 is considered excellent. However, that may vary from one bank to another.
Here are a few tips to keep a good CIBIL score:
Make timely and full payment of credit cards
The one thing that helps the credit score the most is timely and full payment of credit card dues and loan EMIs.
“The more you do this, the higher your score is likely to be. Avoid late payments, especially on unsecured debt like credit cards, because one late payment could hit your score hard,” said Adhil Shetty, CEO, BankBazaar – a marketplace for financial products.
CIBIL scores update on a monthly basis. So keep repaying dues on time and do a monthly credit score check to track the progress.
Maintain old credit cards
The age of the credit lines has a moderate impact on the computation of the credit score.
“The longer you have a credit line, the stronger it reflects upon your ability to keep paying your dues, which is why closing an old credit line such as a credit card may moderately lower your score in some circumstances,” explained Shetty of BankBazaar.
Avoid taking cash from credit cards
One of the common mistakes committed by an individual is taking cash out of a credit card. Debiting cash from a credit card can be costly as lenders charge more interest for it than they do it for making digital purchases.
Avoid making too many credit inquiries
Making multiple inquires for loans or credit cards also adversely impacts the CIBIL score. According to experts, one should only apply for a credit card or a loan when it is really necessary. Opening a new credit account also lowers the average credit age.
Keep checking for inaccuracies
The financial behaviour may not always be the reason for a lower credit score. There may be errors in the credit history information that may lead to a lower score.
"Verify your CIBIL report for errors; if you find any, you can dispute it. The authorities will verify the details and make the necessary changes in the report. A mistake in the spelling of a name or a missing/additional transaction can flip the score upside down," according to ClearTax - an income tax e-filing platform.
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