Get a good CIBIL score with the help of these 6 financial habits
A good CIBIL score increases your eligibility for Personal Loans and helps you enjoy multiple benefits including affordable terms, quick sanctions of credit, and a higher amount of funds. In order to have a good CIBIL score, it is important to make wise financial decisions that will help you maintain it. But first, ensure that you inculcate sound financial habits that will help you increase your CIBIL score over time. Take a look at what these habits are.
Borrow different types of credit
In order to increase your CIBIL score, it is important to have a balanced credit history. Having a good mix of credit in your CIBIL records shows that you can manage both secured and unsecured loans with equal prowess, and are financially responsible. This helps your CIBIL score increase over time and proves your creditworthiness. That being said, avoid taking multiple loans at the same time as this indicates that you are credit-hungry and doesn’t improve your CIBIL score.
Pay what you owe on or before time
Make prepayments towards your loans whenever you have excess funds on hand. This will give you a chance to close your loans before time, thereby making you debt-free faster. Along with this, pay loan EMIs on time and clear credit card dues in full. Timeliness and regularity will improve your CIBIL score.
Refrain from closing old credit cards
If you have a credit card that you barely use, but are able to afford, avoid surrendering the card. In doing so, you will lengthen your credit history. On the other hand, giving away the card will erase your past usage details and immediately bring down your CIBIL score. This is also because as per CIBIL, maintaining credit history is equally important. So, remember that even if you don’t use certain credit cards, maintain them to give your CIBIL score a boost.
Limit your credit utilization
While you may be capable of paying your credit card bills in full, it is still important to restrict the amount of credit that you use. This is because when you use the credit extended to you entirely, it indicates a dependency on credit and shows that you are unable to live within your means. So, ensure a low credit utilization ratio in order to prove yourself as creditworthy.
Don't take a loan without a repayment plan
Your CIBIL score will reflect a change when you borrow funds. However, it will start to go up when you begin paying the loan on time. So, it is important that you have a repayment plan in place before you opt for a loan. For example, if you are thinking of taking a Personal Loan, first check the eligibility for Personal Loan to ensure that you are likely to get approval. Then, use an EMI calculator to judge its affordability based on the interest rate and tenor.
You can ease repayment by taking a Personal Loan of up to Rs.25 lakh from NBFCs. Here you can flexibly repay your loan over a comfortable tenor of 12 to 60 months and pay interest-only EMIs, repaying the principal at the end of the tenor, if you opt for the Flexi Loan facility.
Save and invest appropriately
This last tip will help you increase your CIBIL score indirectly. By saving and investing smartly you will be able to ensure that at any given point of time you have enough funds to repay your loans. This will also help curb the need to take multiple loans simultaneously, as you will have ample funds on hand.
Maintain your CIBIL score by following these financial habits and keep track of the score by checking it regularly. This way you can ensure that the financial institutions that you deal with are updating your information with CIBIL. You will also be able to rectify any errors that have the ability to further lower your CIBIL score.