New to Credit? Tips to Build and Maintain a Good CIBIL Score
The CIBIL score represents a financial passport that lenders in India can trust. CIBIL scores, 300 to 900 actually emphasize repayment discipline. Fresh starts are always in your orbit if the tides work right. Bajaj Markets provides tools to easily track your credit health, including checking a CIBIL score. A CIBIL score above 750 in India can lead to favourable loan terms. Hence, using these tips, keep a good score with CIBIL for better prospects for financing.
10 Best Ways to Build and Maintain a Good CIBIL Score
Developing good financial habits leads to a strong CIBIL score. Timely payments and careful borrowing are vital when managing credit. Here are 10 specific tips for maintaining an above-750 score for lender confidence:
1. Using a Basic Credit Product
Some loan products report repayment behaviour to credit bureaus and, thus, build a good credit history. Here, the idea is to show responsible behaviour that can be translated into an even higher limit or an unsecured loan in the future.
2. Pay Bills on Time, Every Time
Any missed payment can affect your credit score, even if it is a day late. Use reliable apps to set reminders for paying credit card bills, loan EMIs, and utility bills on time. A late payment of 5000 can cause value damage of 70-100 points. Banks also inform CIBIL every month, which is why maintaining discipline is crucial.
3. Keep Credit Utilisation Below 30%
To avoid dipping into the high utilisation levels of 70-80%, spend around 30000 on a credit card of 1 lakh and then keep a healthy credit utilisation ratio in the process. You may request an increase in your credit limit through your bank app so that it can be adjusted for emergencies.
4. Avoid Multiple Loan Applications
Making multiple loan applications can lead to temporary score drops due to hard inquiries. Applying for 3-4 loans within a month may raise concerns about your financial stability. So, check CIBIL score requirements using Bajaj Market’s calculators upfront to target offers effectively.
5. Maintain a Healthy Credit Mix
An average balanced mix of secured loans (home loans, gold loans) with unsecured credits (credit cards, personal loans) portrays versatility. For instance, a salaried professional may have a home loan, a car loan, and two credit cards. However, with unnecessary loans, being able to repay them should yield an insufficient amount of borrowing.
6. Track Co-signed or Joint Accounts
In India, joint loans can impact your credit score. So, make sure co-borrowers, like siblings for education loans, pay on time to avoid negative effects on your credit score, as defaults on joint loans affect all parties involved.
7. Review Your Credit Report Annually
Incorrect loan amounts, duplicates, or fraud aren’t common errors covered here. So, visit CIBIL’s website for your free annual report. Resolve issues by submitting evidence online. This helps avoid long-term score damage.
8. Don’t Close Old Credit Cards
The age of your oldest account matters for 15% of your CIBIL score. Even if you do not actively use a card that has been there for 5 years, keep it alive. Use it once every six months for minor expenses like fuel or subscriptions so that the issuer does not close the card on you. This allows you to maintain the length of your credit history.
9. Settle Outstanding Debts Strategically
Consider renegotiating with multiple lenders. Converting a high-interest credit card balance into EMI can reduce monthly payments. Settling debts, even with partial payments, is better than defaulting, which can impact your credit report for up to 13 years.
10. Check CIBIL Score Regularly
Regularly check CIBIL score to check if there is any changes. Sudden drops may signal identity theft, such as misuse of your PAN for loans. Swift detection aids in resolving issues promptly.
What Can Happen When You Maintain a Good CIBIL Score?
CIBIL Score in India means a score above 750, guaranteeing financial freedom, which implies concessional interest rates, smooth loan disbursals with added rewards, and a cherished financial future space for making big financial decisions.
1. Fast Loan Approvals at Cheap Rates
A credit score above 750 means low risk for banks. The ICICI and HDFC banks fast-track home loan applications with sanctions often made within 48 hours. You could negotiate lower rates, ensuring thousands of savings during the loan tenure. A high score would also ensure small businesses would benefit from the tailor-made MSME loans offered by the State Bank of India.
3. Higher Chances in Financial Emergencies
Sometimes, immediate financial need during circumstances like medical emergencies or loss of a job occurs. In that case, a high credit score means you will get personal loans with 10-12% interest instead of 18-24%.
Conclusion
To improve CIBIL score, timely payments, wise borrowing, and report checking are must. A score above 750 remains significant in the Indian credit market, giving interest savings and securing the family. So, go through your CIBIL Score from Bajaj Markets now and remain updated to increase financial trustworthiness.
