A CIBIL Score or a credit score is adjudged to an organization or an individual and is the summary of the entity’s credit history. The credit score is given out of a possible score of 900 points and can even be zero. A CIBIL score is the first point and a rather critical point in the financial evaluation of an individual or a company. There are many online platforms and various other ways to determine your credit rating. The rating is not a constant and keeps changing depending upon the credit practices of the entity. Maintaining a good CIBIL score is makes it easier for you to avail a small business loan or any form of small business financing. A poor credit score, on the other hand, acts as an impediment to avail a personal or business loan.
Read on and find out about some practices that will help you increase and better your CIBIL score.
Make your payments on time
Whether it is the monthly installment that you took on the latest phone that you bought or the repayment of your home loan or even the repayment of your business loan, the fastest way to improve your credit score is by making all your payments on time. Timely payments have a positive effect on your credit score and therefore making your payments on time will help you reap benefits in the long run.
Limit using your credit card
Your credit card can be your saving grace on many occasions, but exercising discretion when using is a better practice. In fact, there is almost an unsaid rule about credit cards – where you should not use the credit card more 50% of the limit. When you curb the usage of your credit card, your CIBIL score rises as you are not dependent on a credit card to make your payments. Needless to say, signing up for a new credit card, will not work in your favor if you are looking to increase your CIBIL score in a short span of time.
Work on areas in your credit report to improve them
Your credit report will have a clear summary of the areas that you can work on so that you can improve your CIBIL score. So instead of just filing away your report, read it for cues on areas that need improvement and then work on them and see your CIBIL score increasing.
Pay any outstanding dues immediately
Whenever there is a delayed payment, questions are raised on your ability to repay any credit that you have taken on time. Delayed payments have a negative impact on your CIBIL score while clearing your dues might make it easier to take your score from poor to good.
Avail a secured card
Financial institutions – mostly banks offer a secured card against a fixed deposit. Opting for such a card may help you improve your credit score as it reflects the trust that the bank has in you by way of extending a line of debt to you by way of a secured card.
Remember that, a CIBIL score is not a permanent rating and it changes as per your financial activities and credit history. Therefore though some practices might improve your score temporarily. Going back to unadvised financial practices could lead to a further drop in your CIBIL score and limit your access to small business financing options.