We often hear some people learning about their low CIBIL scores much to their surprise wondering why their loans did not get approved. Credit cards and loans for some people get approved very easily while it becomes almost impossible for some others. The type of loan getting approved is also an important consideration and all approvals usually take place based on a credit score given to every individual. These scores are determined by a person’s spending history and prior credit card records. Good credit scores are necessary for getting easy loan approvals on other kinds of loans which usually include housing or auto loans or even ones for setting up a business.
Being one of the leading companies offering credit information and history in India, Credit Information Bureau Limited assigns a score to every individual who wishes to have their credit score evaluated. It is also considered a reliable measure of one’s creditworthiness by most financial institutions. The most common reasons for poor credit score include delays in clearing of bill dues, exceeding one’s credit limitations or having too many credit cards with outstanding bills. If you’re wondering how to improve on your CIBIL scores, here are a few tips on increasing your CIBIL scores by using your credit card. For people setting up their business, good scores help in attaining low-interest rates, quick mortgage approvals and an easy hassle-free process overall.
Keeping a track of your credit card expenses
It is natural to give in to buying impulses, especially when one is attracted by too many offers and discounts. However, keeping a track of one’s expenses, especially on one’s credit card is very important. Any amount spent on the credit card at any given point in time will have to be paid back and having this in mind should be reason enough to not exceed one’s limits. Budgeting your expenses in a responsible manner can help in this case. Even if your credit scores have fallen, a consistent and controlled spending habit for a continued stretch of three to four months should add some positive points to your CIBIL Score.
Paying bills and utilities
Nowadays, most places offer special discounts, cashback and other offers when making payments on other portals like e-commerce websites and for clearing bills on utilities. A common tip on increasing your CIBIL score by using your credit card is to use it for clearing off bills. Utilities would include any payments made for electricity, phone bills or water bills. Expenses incurred on such payments are usually lower but help build a positive credit score because you’re clearing your dues instead of making new purchases.
Making timely repayments
This is one of the most important tips to keep in mind if you want to improve or maintain a good CIBIL score. All credit cards have a minimum payment amount that must be cleared on the due date set for every month. Even if you are low on funds, make sure that you’re at least able to clear the minimum payment for every month. For a faster process of improving your CIBIL score, try and pay off any outstanding dues instead of barely meeting the minimum.
Increasing CIBIL score with secured credit card
Secured credit cards are backed by fixed deposits in one’s bank account. The relative risk for such credit cards is lower. Credit checks carried out on such applications are also more relaxed since you already have a fixed amount deposited with the bag. Improve your CIBIL score making expenditures on such secured credit cards instead of other types of cards.
CIBIL score improvement takes time and some amount of financial commitment. A well-disciplined approach to your spending habits consistently over a period of 4-8 months is a good enough time to see an increase in your score. Loan approvals become difficult for many small and medium scale businesses based on an individual’s credit history. Approvals are lost in the hassle of paperwork and become difficult for businesses to expand within the limitation of funds. To ensure adequate working capital for smooth and thriving business, positive cash flow is made possible with certain kinds of unsecured loans. Platforms like Indifi aim at providing unsecured loans and are becoming a preferred choice for many business owners to increase their funding and without having to undergo the hassle of submitting collaterals and other paperwork. Any financial expenditure, be it through credit cards or through unsecured business loans taken through online lenders such as Indifi will create a credit history that you must be aware of and will affect your CIBIL score. The standard tips and rules of making every effort to stay within your financial limits.