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Get answers to commonly asked questions related to the credit score and credit reports
Physical well-being is very essential and so is financial well-being. While individuals understand the importance of these two, another facet that has slowly become important is the credit health of an individual. Gone are those days, where loans and credit cards were considered unnecessary. The current generation has understood the power of credit and the way it can help us build assets, deal with emergency situations or just meet day-to-day needs.
Just as the demand for credit has increased, banks and other financial institutions felt the need to lend to creditworthy individuals which led to the development of Credit Information Services or the Credit Bureaus.
The Credit Bureaus assign scores to individuals based on their previous credit behavior, which is called a Credit Score. The score can range between 300 through 900, with higher scores indicating higher levels of creditworthiness. To be able to be eligible for any sort of loans, a good credit score is one of the key factors.
Unfortunately, due to errors, oversight, or lack of information about the importance of credit scores, certain individuals may find their credit score at the lower end of the range. This might make it quite difficult for them to avail any kind of credit or with unfavorable terms. This may be frustrating and distressing for those who are stuck with a low credit score. But you would be glad to know that a credit score is not a constant number that doesn't change.
You have the ability to change your credit score by changing your behavior towards credit.
Credit score can be fixed; all it needs is conscious, positive and responsible behavior towards credit. Having worked with many clients, we at CreditMantri understand that individuals looking to improve their credit score require concrete pointers or steps that help them fix their credit score rather than just telling them they should behave responsible towards credit.
So, we present to you our top tips for fixing a low credit score.
Your credit score is no longer a mystery. RBI has mandated that all individuals should be able to check their credit scorewith the credit bureaus once a year without any payment of fee. In addition, many fintech companies like us allow you to credit score check your credit score free of cost at your wish. Checking your credit score is the first step to fixing your score.
Once you know your score, you can take the required action towards improving it and also have a rough idea of the nature of improvement that is required. Our Credit Improvement Experts advise individuals to check their credit scores at least once in 6 months.
One of the basic premises of going in for any kind of credit is that the amount will be paid back on time as per the agreed terms and conditions. If you are not making the repayments according to the schedule, then you are not portraying a responsible behavior. So, if you are looking to fix your credit score, missing EMIs or Credit Card Outstanding Bills is a big no-no. If you are struggling with your finances, it makes sense to make your EMI payment even before you spend for anything else.
Opting for a check-off facility (direct debit from your salary), if available, may help you in this regard.
Additional Reading: All that you should know about setting an automatic payment
If you have unpaid balances from any of your earlier loan accounts, it might be a good idea to close them by repaying them in full. If you have any difficulties in doing so, you might want to contact your lender and ask for a smaller EMI or a longer tenure. It will increase your interest costs but will help you improve your score as long as you are paying back regularly.
Avoid going in for Settlement of loan accounts unless you are in dire conditions.
Additional Reading: Do old settled accounts affect your new loan applications?
Each credit card comes with a set upper limit on utilization. This limit is set based on the credit score, current income, other debts being serviced, etc. Just because you have a provision to spend a higher amount of money, do not blindly spend on your credit card. Experts advise that the credit utilization ratio which is the ratio of your spending to your overall credit limit should not exceed 30%. In other words, you should not utilize more than 30% of your credit limit during any billing cycle.
There are two types of credit - secured (against a security) and unsecured (without a security). Loans like home loans, vehicle loans, gold loans, etc are approved against a security, whereas personal loans and credit cards are approved without any requirement of security. If your credit portfolio looks more inclined towards unsecured loans, it may be one of the causes of a bad credit score.
If you have too many unsecured loans, wait till you close some of them before applying for any more of them. A person with too many unsecured loans is construed to be a credit hungry person!
When you apply for any credit, your lender will make an inquiry with the credit bureau to get your credit score and credit report. This process is called a Hard Inquiry. Lenders like those individuals who apply for credit only when there is a need for one, rather than those who apply for credit at the drop of a hat.
When a person applies for credit quite frequently, it depicts the image of a person who is unable to manage his/her finances well, who, unfortunately, doesn't come across as a good candidate for further credit.
Additional Reading: How does Hard enquiries affect your credit score?
Lenders love lending to seasoned borrowers who display consistent responsible behavior towards credit. While loans have to be closed after the payment of the last EMI, credit cards allow you the luxury of holding them forever. If you have been responsible with your credit card use for quite some time, do not close it.
Credit History is one of the factors deciding your credit score. When faced with a low credit score, do not make the mistake of closing your earlier credit accounts. If you are unhappy with the card or have found a better card, waiting till you fix your credit score may be a good move.
A low credit score can be fixed but cannot be fixed overnight. It takes persistent efforts over a period of time, which also depend upon your current credit score and the improvement that you are looking at. Even after you achieve a good score, it pays to take efforts in maintaining it.
A CIBIL™ score is a three digit number between 300 and 900 that gives potential lenders a quick idea of your loan
Credit repair involves rebuilding your credit health to a level where you become eligible for loans.
A CIBIL™ Score is an indicator of an individual’s credit worthiness. It impacts the individual’s ability to borrow
A credit report is a history of your credit behaviour and contains detailed information on all your loan and credit
A credit rating - also known as a credit score - is a 3 digit number between 300-900 that gives potential lenders
A bad credit score is generally one that is less than 650. A credit score is a three digit number in the range of 300-900
Yes. In fact, a credit score of 850 is very good! Most lenders look for a minimum credit score of 750 to approve loans
There are several ways in which you can improve your credit score. Depending on how good or bad your score is,
Is 800 a good credit score? Yes. In fact, a credit score of 800 is very good! Only a small percentage of people reach,
Is it possible to obtain a free credit check or credit report? The answer is yes and no!
Your CIBIL™ Score plays an important role in getting loans and credit cards sanctioned, because it gives lenders
It is not possible for anyone, either lenders or borrowers, to get a CIBIL™ score or credit report for free.
It is important to know that there is no such thing as a CIBIL™ defaulter list. There used to be a defaulter list earlier,
There is really no number that can be established as the average credit score in India. Many people see regular
You can repair your credit absolutely free if you do it yourself! However, many people choose to get professional help
First, it is important to note that there is no ‘Defaulters List’ that is maintained or circulated by CIBIL™ or any of the other
Sourav and Ankit are watching the New York Marathon on TV and decide that they want to run a marathon.
In India, the best credit score to have is one that is 750 or above. The three credit rating agencies that operate in India
Is a credit score of 700 good? While it is not a very bad score, it is not good enough to automatically qualify
It is difficult to get a loan with a credit score of 650. Most banks look for a minimum score of 750 when deciding
It is not likely that you will get a loan with a credit score of 600. Most banks look for a minimum score of 750
It is difficult to get a loan with a credit score of 550. Most banks look for a minimum score of 750 when deciding
A poor CIBIL™ score can increase your financial problems and make it difficult to access credit, whether as a loan or credit.
One common worry that runs through your mind after you have made a credit card settlement is,
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