Free CIBIL Credit Score Check176 views
- A good credit score is 750 and above - But do you know how to get it?
- Let’s read this post that explains the idea to reach this three figure mark when stuck with different situations
A credit score is a numerical representation of how you have lived your credit life. Credit bureaus like CIBIL, Experian and others assign individuals a credit score from 300 to 900 based on their repayment track. The credit score that you should look for is 750 and beyond to get credit approvals easily and quickly. Such a score shows impressive debt management that lenders seek when approving a loan or credit card. But the key lies in having such a score, which we can tell you here. Let’s read the plan for a good score.
Table of Contents
- 1 How Should You Plan for a Good Credit Score?
- 1.1 How Should You Plan for a Good Credit Score if You are Paying a Loan?
- 1.2 What to Do If You are Paying Multiple Loans?
- 1.3 Shall You Do a Balance Transfer for a Good Score?
- 1.4 What Credit Disciplines Should Credit Card Shoppers Show for a Good Credit Score?
- 1.5 Will Converting the Credit Card Outstanding into EMI Help Boost Your Credit Score?
- 1.6 What to Do If Your Score is Poor?
How Should You Plan for a Good Credit Score?
A good credit score is a result of paying loan EMI or credit card bill on time, ensuring optimum credit limit utilization, etc. While some manage to do such stuff, some struggle. And that’s why we see a variation in credit scores of individuals. So, we will talk about the specific credit manuals that can help all of you achieve a good score.
How Should You Plan for a Good Credit Score if You are Paying a Loan?
Someone paying a loan should keep their household and other expenses to manageable proportions as their EMI amount could be significant. Go through your routine, check the expenses carefully, eliminate the unnecessary ones and save the much-needed sum to pay on time. Maintain that and you’ll have a good credit score.
Apart from that, say No to additional loans if you don’t need them. Most of the time, we don’t check our savings and tend to take too much loan and end up putting ourselves in a tight situation financially. When deciding the loan amount, consider your savings too to help yourself later with an affordable EMI and a controlled outflow of interest.
What to Do If You are Paying Multiple Loans?
With multiple loans, you would most likely have much lesser space for spending compared to someone with a single loan or no debt. Assuming you have three loans with three different dates. In that case, you may miss one or two loan payments, if not all. See if you could consolidate your loans in one and pay a single EMI instead of three. The loan payment amount may not be lesser than before, but you could manage it much better by consolidating your loans. All that will result in a good score for you later.
Now, consolidation would happen for similar loans. Like you have three personal loans or two personal loans and a credit card outstanding. But if you want to merge your home loan EMI with a personal loan EMI, it won’t happen.
Shall You Do a Balance Transfer for a Good Score?
If you feel your present loan EMI is quite high, you can reduce it using the balance transfer process. Lenders offer you the balance transfer facility to switch your existing loan to another lender at a lower rate of interest. This would decrease the monthly installment amount, which you could pay easily and ensure a good credit score. You could even get rid of loan obligations earlier by paying the same EMI. Besides, this will reduce your interest outgo further.
What Credit Disciplines Should Credit Card Shoppers Show for a Good Credit Score?
Credit card shoppers should not fall prey to impulsive spending and foot their bills beyond their reach. Be mindful of necessary and unnecessary expenses before using a credit card. Accumulating spend-based rewards is good, but if it comes at the expense of higher bills, you better discard the same. Because that could force an error of late payment or a payment skip later, which would go on to reduce your credit score. That’s why we emphasize on choosing the right credit card with which you can earn rewards by spending less. With that, you will not only enjoy your shopping but also reward yourself with a good credit score.
Will Converting the Credit Card Outstanding into EMI Help Boost Your Credit Score?
If you are paying the credit card due partially, you could revolve the debt at an interest rate of around 30-45% per annum. You may not realize it now as the partial due amount you are paying would seem affordable to you. Just look at your credit card statement and see how much interest you have accumulated. It might give you sleepless nights! If you keep going this way, you might even struggle to pay the minimum due, which accounts for about 5% of the outstanding balance in a billing cycle, later and let your credit score drop fast.
But don’t worry, we have a solution for you! You can convert the credit card outstanding into EMIs at a lower interest rate of 12-18% per annum. However, lenders allow only tansactions for EMI conversion which are not older than 30-60 days. You can also take a personal loan to pay the dues at an interest rate of 10-18% per annum. These options will help clear your tall credit card dues easily and set the tone for a good credit score.
What to Do If Your Score is Poor?
The first thing you need to do is to check your credit report from CIBIL or any other credit bureaus. See the reasons for a poor score; it will most likely be due to a poor repayment history. If that remains the case, start paying your dues on time and improve your score. The score won’t improve at a quick rate, but staying patient and doing the required stuff will help you achieve the coveted score of 750 over time.
Other issues apart from a poor repayment track could be a debt settlement tag that you get for paying a reduced sum to the lender. Although the reduced sum forms a part of the debt settlement deal, it does not give a good impression of yourself. Most lenders will deny you unsecured credits such as personal loans.
But you can improve your credit score by applying for secured credits such as loans against fixed deposits and other securities. You can even get a credit card against fixed deposit and improve your score. All you need to do is pay on time and your credit score will keep increasing with time.