Financial institutions calculate an individual’s creditworthiness according to their CIBIL score. The score is based upon a person’s CIBIL report that reflects his credit history. A poor or low can hinder a request of financial assistance such as loan applications. Medical emergencies and debt repayments are times when a lot of funds is needed on very short notice. With a high [url=https://www.bajajfinserv.in/how-to-check-cibil-score-for-business-loan][b]CIBIL score[/b][/url], availing loans is easy.
The Reserve Bank of India has directed all financial institutions to ensure that a person’s credit history is scrutinised before loans disbursal. A poor CIBIL score may hamper the chances of obtaining a loan or even a credit card. However, there are various ways through which a poor CIBIL track record can be improved.
[b]Improve your CIBIL score[/b][b]
[/b]To improve and increase the CIBIL score, you must first understand how the score is calculated. It is based on the CIBIL report and falls between 300 and 900. The higher the score, the better the chances of obtaining financial assistance. The score is based on past credit history and financial patterns.
An individual with a CIBIL score of 750 or more is considered as credit-worthy for unsecured loans, advances which do not require collateral. Those with lower CIBIL scores can also apply for loans, but mostly secured loans against collateral.
Scores of 750 and above may also lower your [url=https://www.bajajfinserv.in/business-loan-fees-and-interest-rates][b]business loan interest rate in India[/b][/url] significantly.
It is a must for every individual to increase your CIBIL score and avail the best loan terms without any hassle even in emergency situations.
Here are 6 proven methods which will increase your CIBIL score in a very short time span.
[b]1- Maintain financial discipline[/b][b]
[/b]To obtain a business loan or any other type of credit, maintaining steady and dependable financial discipline is essential. Regularly repay your previous debts across EMIs on time. Any delay in EMI repayments also attracts penalties other than being recorded on your credit report as a negative. Make it a point to repay all your outstanding debts on time. If necessary, set a reminder when your next repayment date is coming up.
[b]2- Retain your oldest credit card/s[/b][b]
[/b]Once financial institutions notice that you have maintained credit cards with regular payments, your creditworthiness will improve. It will also provide you with a lengthy credit history, beneficial for large loan amounts with easy processing.
[b]3- Opt for longer tenors for loans[/b][b]
[/b]If you are applying for a loan, ensure that you also choose a long tenor. Doing so ensures that your EMIs do not cost too much and provides you with a longer time span to repay your debts. It is important to keep EMI amounts low, especially when you avail loans, for example, to be able to expand your business to other locations. Although longer tenors mean a higher cost to loan, it also means you will have to pay lower EMIs, helpful to in case of such expansion plans.
[b]4- Never opt for too many loans simultaneously[/b][b]
[/b]Availing or applying for multiple loans simultaneously in a short span of time showcases you as a credit-hungry individual. Each application is recorded on your credit report. If you make multiple such applications, your CIBIL score will decrease.
[b]5- Crosscheck your CIBIL report regularly[/b][b]
[/b]Human error is a given. A loan application may include erroneous data from the part of the lender and cause unnecessary issues on the CIBIL report. To ensure that your CIBIL score does not get downgraded accidentally due to an error, it is better to check your individual scores from time to time. You can easily do that by logging on to CIBIL’s official website. Not doing so at periodic intervals is one mistake which most financial experts warn about.
[b]6- Choose different types of credit[/b][b]
[/b]You will not have a credit rating if you have never taken a loan before. If you are an aspiring businessman looking for low interest rate [url=https://www.bajajfinserv.in/business-loan][b]business finance[/b][/url], you can opt for different forms of credit like secured and unsecured loans with varying tenors.
Always seek professional financial assistance if you have any doubts when applying for a loan. It helps you make fewer mistakes and also improves your general awareness about financial matters other than avail the most suitable and attractive loan benefits.
Naina Kapoor's Blog
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