A credit score plays a big role in approving a credit line or any other loan. It depicts the ratio between your income and liabilities while tracking how you have handled your past credit liabilities. A sound credit score is needed to get a credit line at reasonable interest rates for the desired tenure and get a good loan.
Mostly, all the lenders consider a credit score above 700 decent. But, what if your credit score is not in good shape and it’s coming between the approval of your loan? Well, there are a few measures that you can take to improve your credit score and get the desired loan deal.
5 Guaranteed Ways to Improve Your CIBIL Score
1- Follow the 30% Credit Utilisation Rule: Using less than 30% of your total approved credit limit is always a safe way of using credit. This keeps you from falling into debt and maintains your credit health. More than 30% of usage is considered high credit utilization. To use most of your credit, it’s advised to have a larger credit limit which is again approved based on your credit score.
2- Repay your Loans on Time: Timely repayment of the loan is a key factor in building and improving your credit score. While borrowing credit is considered good, it opens your credit history, but not paying them back on time indicates both carelessness and bad financial health. Thus, using credit responsibly, keeping in mind the payback capacity, and making on-time payments must improve your credit score.
4- Opt for a Credit Mix for Borrowing: If you don’t borrow credit, there won’t be any credit history on your account, resulting in no say in approval or disapproval of the loan. Also, having only one type of loan seems easy to maintain, but this doesn’t help build your CIBIL score. On the other hand, having a mix of diverse loan types such as a Line of Credit, personal loan online, and the home loan can help show how good you are at managing them.
5- Avoid Applying for Multiple Credit Lines: With a credit mix, it means loans of a different sort that helps improve your CIBIL score. But, when you start applying for multiple loans without paying back the previous ones, this doesn’t favor your credit health. Borrowing a personal loan over another or a car loan over another etc. is not suggested when you are working to build your CIBIL score.
These measures will help you improve your CIBIL score, but there are also lenders extending a credit line with soft or no credit checks. FlexSalary is one such lender that extends a credit line to salaried professionals. You can apply for a credit line of up to Rs. 2,00,000 based on your salary slip and bank statements. While presenting a sound credit score is always a cherry on the cake to get a reasonable interest deal.
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