Loan applications getting rejected because of a poor credit score is nothing new in India’s lending space. And there are ways to improve the score that you can read and hear across online and offline channels. Many typically suggest paying dues on time, maintaining optimum credit limit utilization and showing restrain on frequent applications. All these are handy without a doubt. There are some unconventional methods to improve credit score that many may not know. But they do help improve the score and boost the chances of loan approvals. Want to know those? Read this post further.
Pay More Than the Credit Card Due Every Billing Cycle
You may be surprised to hear that. But it can be a boon to your credit score. Suppose the total due on a credit card is ₹10,000. Pay ₹15,000 and get the overpaid amount of ₹5,000 adjusted in the next billing cycle. Continue doing so over a reasonable period to get the score up to the desired level. The extent of the overpayment amount will depend on your income, obligations, etc.
Opt for Secured Credit Cards
With a poor credit score, the door for collateral-free credit cards is more or less shut. But you always have the option to apply for a secured credit card that lenders grant against your fixed deposits. This could increase your score very fast if you maintain a timely payment record. Interestingly, most secured cards don’t come with a fee that you need to pay in an unsecured card. If you already have a fixed deposit, you can get the card straightaway. Else you’ll need to open a fixed deposit account of a certain value specified by the lender and get the credit card on that behalf. The credit limit will be around 80%-90% of the fixed deposit amount.
Take Loans from NBFCs
Non-banking finance companies (NBFCs) don’t give as much importance to the credit score that banks do. So, if you are getting a loan from an NBFC albeit at a higher interest rate, it won’t be bad to grab the offer. This will grab the attention of banks which will then check the NBFC that has taken the risk by granting you the loan despite a poor credit score. If the repayment track of that loan is found to be smooth, you can get exciting balance transfer options, fresh loan offers, etc.
Go for Small-ticket Purchases
Credit score norms are not that stringent for loans taken to buy consumer durable such as LED TV, air conditioners, etc. But having a solid repayment track for such loans will help improve your score and make you eligible for big-ticket loans in the future.