A report highlighting the recent credit trends stated that even when the overall credit options witnessed a decline in growth, personal loans continued to surge in 2019. As the disparity between monthly income and desire to improve the standard of living is widening, more individuals incline towards personal loans.
Notably, such a credit option can only be sought by eligible applicants. Now, most eligibility criteria accompanying a personal loan are quite simple.
The CIBIL score is one of the few eligibility criteria which can be improved over time and can increase the chances of securing a loan. To elaborate, there are certain factors which help to increase credit report significantly and in turn, enable individuals to obtain credit seamlessly.
Factors that impact the credit rating
Here is a list of factors which may come in handy to improve CIBIL score.
1. Timely payment of dues
Intending borrowers should make it a point to pay their dues, especially credit card bills on time. Since missing out on even a single EMI tends to reflect on one’s CIBIL score, individuals should be punctual when it comes to paying off their debt.
2. Maintaining a favourable credit utilisation ratio
As the credit utilisation ratio influences CIBIL score, maintaining it is one of the most useful things you can do to improve it. It is recommended to keep one’s credit utilisation ratio below 30% of the credit limit to lower the risk of default and in turn, to create a favourable image amongst the lenders.
3. Having a positive credit history
A delay in payment or default tends to remain in a borrower’s credit record for as long as 7 years. As a result, it makes availing additional credit. That being said, the fastest way to improve credit score is to maintain a clean credit history. Individuals can opt for an auto repayment option or set a reminder to lower their risk of missing out on the payment date.
4. Type of credit
Besides a good credit history, a debt portfolio which comprises a healthy mix of secured and unsecured loans advances is more likely to create a positive impression of the credit history. It indicates that borrowers are capable of repaying and managing their debt effectively. In turn, it increases their credit scores.
Also, certain financial institutions such as Bajaj Finserv extend a high loan value and attractive rates of interest to personal loan applicants with a high credit rating.
They also provide pre-approved offers to make the entire process of availing financial support less cumbersome. Such offers apply to multiple financial products, including personal loans and business loans. Check your pre-approved offer in a few steps by simply sharing your name and contact number.
5. Be thorough with the credit report
Individuals should also make it a point to scrutinise their credit report thoroughly. It will help them to identify and eliminate any errors effectively, which may otherwise harm their CIBIL score.
Other than these, individuals should also refrain from applying for multiple credits at the same time. It is because rising enquiries tend to reflect on the credit report in a negative way and hampers the CIBIL score as well.
Additionally, individuals should check the free CIBIL score online before applying for a credit to make an informed decision.
They can also find out if they can get a personal loan with a poor credit score. Subsequently, they should find out the terms and clauses associated with a personal loan for low CIBIL.
In short, paying dues on time, maintaining a good credit history and keeping the credit utilisation ratio below 30% are some of the best ways to improve your CIBIL score. Similarly, having a diverse debt portfolio and being thorough with the credit report is beneficial for credit rating as well.
(i) Make timely repayments of loan EMIs and Applykaroo dues
(ii) Don’t apply for multiple loans like personal loan, car loan, and home loan frequently.
(iii) Keep a credit balance of secured and unsecured loans. Personal loan and line of credit is an unsecured loan, while home loan, two wheeler loan, car loan, and loan against FD are secured loan.
(iv) Keep your monthly expenditure low.