Last Updated on March 9, 2024 by admin

Your credit score on your CIBIL report plays an important role in your financial life. A credit score of below 750 may be a curse for you if you are one of those looking for a credit option urgently. However, this credit score is only a number and may be ameliorated. All you require doing is to concentrate on the below listed parameters and avail of the loan of your choice without any delay. Suppose you are one of those looking for an SBI home loan, then note that the acceptable SBI home loan CIBIL score for loan approval is 750 and above. Thus, for a home loan from SBI CIBIL score of a higher figure is important as well as a sound credit repayment history is a must. Read on here to learn about the important tips for improving your credit score if you are one of those with a lower credit score – 

Set reminders for timely repayment of the loan and in full

Missing out on the outstanding debt may be a major mistake, as this can badly affect your credit score. You require being punctual when it comes to paying your loan EMIs. If your loan EMIs get delayed, you do not just need to pay penalties, but your score even increases if you are one of those who are bad at noting the dates and setting reminders to repay the amount on time. 

Check for any errors in your credit report.

While you may have a strong credit history, there may be different unknown errors that may pull down your credit score. Let’s suppose you paid your loan entirely and have closed the same from your end, but still, it may appear as current outstanding owing to an administrative error in your report. Similarly, you will require keeping a check on your mistakes and suspicious activities. Resolve such mistakes, and you will view an instant increment in your credit score. 

Try to maintain a healthy mix of credit. 

It is always recommended to hold a balanced mix of secured credit options like an auto loan, loan against securities, home loan, etc. and unsecured credit options like personal loans, credit cards, etc. An individual holding several secured loans are preferred by the bureaus and lenders and may have a strong credit score. If you hold a higher number of unsecured loan options than secured ones, make sure to prepay your unsecured loans to maintain a balanced mix of credit. 

Clear off all credit cards

The lender considers you to have positive and good financial behaviour if you clear off all your loan and credit card dues in full and on time. This indicates good behaviour on your end. You must ensure to strategically plan to repay all your card balances before the credit card due date to ameliorate your score. 

Say no to becoming a joint account holder.

Do not become a joint holder or a loan guarantor, as any loan default from the other party may even be reflected on your score. 

Opt for a secured credit card

If you opt for a secured credit card from the lending issuers like Axis bank, ICICI Bank, or SBI against your fixed deposit and repay the same in full by the due date, your credit score may increase. 

Also Check: SBI CIBIL Score

Avoid availing multiple loans in a short time span

It is a prudent practice to repay the loan before taking the next one to prevent your score from falling. Availing of several loan deals at a time indicates that you may have inadequate funds to repay them all. Thus, it is better to avail of one credit option at a time and repay it successfully to endow a boost to your score. 

Restrict your CUR (credit utilization ratio)

One of the major ways to ameliorate your score is to not use your card to its maximum limit. It is recommended to keep your credit utilization ratio (CUR) low, preferably under the 30 per cent mark. Let’s suppose your credit card limit is Rs 1 lakh per month, and you must try that you do not pay over Rs 30,000 using your credit card. Keeping your CUR (credit utilization ratio) within the range of 30 per cent may not negatively impact your score. 

Go for a higher repayment tenure.

When availing of a loan, opt for a higher repayment tenure to repay the loan. In this way, the loan EMI may be low, and you may easily be able to make all your repayments on time. Also, you will keep yourself away from the list of defaulters and improve your credit score. 

Enhance your credit card limit

Do not ever say no if your lender asks you to enhance your credit card limit, or you may even ask your bank for an increment. It does not infer that you may spend more funds each month. Instead, you will require being smart regarding expense management. The simple trick here is to have higher credit and ensure to keep your credit utilization ratio low to leave a positive mark on your credit score. 

Generally, it takes four to thirteen months to ameliorate your credit score, which is thoroughly dependable on your situation. All you require doing is being smart, disciplined and patient while spending money and availing of a loan. 

How to ameliorate your credit score post-loan settlement?

Loan settlement may ease your EMI repayment but may result in a poor credit profile and score. However, to ameliorate your score post-loan settlement, you should ensure to follow the listed – 

  • Clear all your outstanding dues and EMIs by the due date and in full. 
  • Maintain a low CUR, i.e., credit utilization ratio. 
  • Do not make loan queries straightaway. 
  • Form your credit history. 

How long it takes for you to rebuild your credit post-loan settlement?

There’s zero exact time for the time it may take for you to rebuild your credit post-loan settlement. It all depends upon your credit score and credit profile. 

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Noah Patel is a finance specialist with over 10 years of experience in the financial industry. He has worked with a variety of clients, including individuals, small businesses, and large corporations, to help them achieve their financial goals. Noah's expertise includes financial planning, investment management, risk management, and retirement planning. He is dedicated to helping his clients make informed financial decisions that align with their long-term objectives. Noah is a frequent contributor to financial publications and has written extensively on topics such as personal finance, investing, and financial planning. His mission is to educate and empower individuals to take control of their financial future. When he's not working with clients or writing, Noah enjoys traveling, playing tennis, and spending time with his family.