Improving your CIBIL score after a financial setback will take time and discipline, but it’s definitely achievable with consistent effort. One of the key things to do is to avoid opening multiple new accounts since opening several new accounts in a short span can lead to financial instability and may lower your CIBIL score. So, you should apply for new credit sporadically and only if necessary.
Besides, you should begin by procuring a copy of your credit report from CIBIL or any other credit bureau. It’s important to review it carefully to spot errors if any. Additionally, you should regularly monitor your credit report to track your progress.
ALSO READ: Can you improve your CIBIL score in a month? MintGenie answers
These are six key things to note:
Pay bills on time: Payment history is a key factor in your credit score. Make sure to pay all your bills, including credit card bills, loan EMIs, and utility bills, on time. Consider setting up automatic payments to avoid missing deadlines.
Reduce credit card balances: High credit card balances relative to your credit limits can harm your credit score. Try to pay down your credit card balances as much as possible. Aim to keep your credit utilisation ratio below 30 percent.
Don’t close old accounts: Closing old credit accounts can reduce the average age of your credit history, which may negatively impact your score. Instead of closing them, consider keeping them open and using them responsibly.
ALSO READ: How to improve your CIBIL score using gifted money? Here are 3 ways
Diversify your credit mix: Having a mix of different types of credit accounts, such as credit cards, loans, and a mortgage, can positively impact your score. However, only take on new credit if you can manage it responsibly.
Communicate with creditors: If you are struggling to make payments, consider reaching out to your creditors to discuss possible repayment plans or restructuring options. Some creditors may be willing to work with you to help you manage your debts.
Use credit wisely: Be cautious with your credit usage and only borrow what you can afford to repay. Responsible borrowing and timely payments over time will gradually improve your credit score.
Notably, rebuilding your credit score takes time, so be patient and stay committed to improving your financial habits. Consistent efforts to manage your finances responsibly will eventually lead to a higher credit score.
ALSO READ: Personal Loan: 4 key advantages of setting automatic payments
Frequently Asked Questions:
Why is it important to pay bills on time?
Payment history is a significant factor in determining your credit score. Even a single missed or late payment can negatively impact your score.
Is payment of debt enough to maintain a good CIBIL score?
Paying off debt is indispensable to maintain a good credit score. However, it is responsible financial management that leads to a good CIBIL score.
How does reviewing credit score help?
It is vital to monitor CIBIL score regularly to track your progress and identify any changes.
How do student loans help establish credit history?
Student loans can help you establish a credit history if they are your first credit accounts. Your payment history, including student loan payments, is one of the most critical factors in determining your credit score.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
Published: 07 May 2024, 06:36 PM IST