Improve your credit score

A CREDIT SCORE is a measure of how diligently you make payments relevant to loans, credit cards, telephone bills, insurance premiums, rent cheques and so on.
Credit Information Bureau (India) Limited (CIBIL) , which collects your credit information from banks will soon be keeping your credit scores on the basis of your bill payments too. CIBIL scores will range between 300 and 900, and a number of the above aspects will go into making that score. However, the most significant of these are repayment of loans and credit cards ¡V these factors will determine your loan eligibility and whether a loan can be granted to you in the first place or not.
Considering the important role your credit report plays in your financial life especially with relevance to loan borrowing and establishing credit worth, it¡¦s time you put some thought into how best you can make your credit report work to your advantage.
Here are list of things you keep your credit score up and above any kind of default:
1. Ensure you get your own copy of the credit report, at least on an annual basis
- Subject your credit report to a thorough scrutiny.
ƒ{- If you have nagging questions about any data, follow it up with CIBIL or the credit agency who has collated the data on the credit report.
ƒ{- Any discrepancies or pending defaults that has already been cleared must be immediately corrected or updated to ensure your credit score is not affected.
2. How do you correct discrepancies?
- Take up the issue with the bank in question first. For instance, if a debt has already been paid off and but the report doesn¡¦t show so. Call the bank and ask them to update with immediate effect.
ƒ{- The bank will then update the credit agency regarding the status and all is well. This approach is less time consuming and far better than directly contacting the credit agency. Punjabi Movie Jihne mera dil lutiya
What if the bank does not oblige to make the changes¡K
- Take up the matter with the credit agency and the banking ombudsman. However, first, wait for a period of 1 month for your bank to take corrective action.
- Act quickly and follow up with the concerned credit agency and the bank. Keep a record of when you have filed a complaint or sought clarification.
3. Put a priority check for your bill payments
Whether they are loans, credit card payments or insurance premiums -- every payment counts. If you need to be reminded about your payment, set up an automated system with your bank to get it cleared within the due date. It is a sure shot way to improve your credit score.
4. Try using your credit cards the smart way
Use your credit card! It serves as an excellent tool to boost a good credit score if utilised properly. However, the trick is to avoid making late payments. Things like not stretching it too close to your credit limit, regular use of the card but timely payments upfront is proof of how you manage credit lent in the short-term.
5. Net worth is key
Your credit report is based on the flow of credit and debt. Here, the ratio between these two factors is directly related to your credit score average. For instance, if you have several outstanding debts, and even if you pay them on time it would still affect your credit score.
Hence try and pay off as much debt as possible and keep them to a minimum before taking a fresh debt or loan.

Why it is important to effectively manage your credit score

In the rapidly-evolving credit landscape, it has become almost impossible for defaulters to get a loan from banks who actively use credit bureaus. The increasing significance of credit reports to the loan seeker prompts questions like what a ?credit report/ score? is and how it affects them.
A credit report is a compilation of information about the individual and his or her credit history that has been reported to the credit bureau by those who granted credit to the individual. This report reflects details of all the individual?s loans, credit cards and other borrowings. It contains information like the date opened, credit limit, outstandings , overdues and written-off amounts among others. An individual?s credit score is generated by information on their credit report, but is not part of the credit report itself.
Credit scores can project the amount of risk posed by the individual to a lender. When lenders request an individual?s credit report, they often choose to receive a credit score at the same time, and will select which scoring model they want to use. Large lenders may use a customised scoring model. For example, for Car loan, a lender may use a scoring model that focuses on car payment history.
Lenders will typically evaluate an individual?s credit report and credit score along with other key information, such as income, against their own internal decision criteria to determine the individual?s ability to qualify for a particular loan type. In future, lenders are also likely to use the credit scores to decide on interest rates. The rates will factor in the perceived credit risk depending on one?s score.
Credit scores can change gradually over time as one?s overall credit picture gets better. This happens by consistently engaging in credit-worthy behaviour going forward, such as paying one?s bills/EMIs on time and using credit conservatively.
There are a few good habits to keep in mind to maintain creditworthy behaviour. The first one is paying bills on time. Delinquent payments can have a significant negative impact on your score. If one has missed payments, they should do their best to get current and stay current. Debt should be paid off rather than shifting it to other accounts. One should look to re-establish their credit history if they have had problems. Opening new accounts responsibly and paying them off on time may help in the long term. One should also be prudent in applying for and opening new credit accounts.
Credit cards can be kept, but they need to be managed responsibly . In general, having credit cards and instalment loans (and paying timely payments) may favourably impact your credit score in the long term. If one is having trouble making ends meet, one should contact his or her creditors. Lastly, one should keep balances as low as possible on credit cards and other revolving credit.
There are also some areas one should tread with utmost caution . One should not close unused credit cards as a short-term strategy to try to raise their score. Also, one should avoid opening a number of new credit cards, just to increase the credit available. This approach could actually have a negative impact on one?s score. If a person has been managing credit for a short time, avoid opening a lot of new accounts too rapidly. Adding new accounts will lower the average account age, which could have a negative impact on the individual?s credit score, particularly if s/he is a new credit user.
It takes time and there is no quick fix for eliminating past aspects of one?s credit history that may negatively affect their credit score. Credit scores are based on one?s credit history and can generally only be changed over time. Remember - accurate and timely negative information cannot be removed from your credit file. Your best approach for establishing credit worthiness is to handle your credit responsibly over time.