Credit score damage is not a permanent scar on your financial health. Yes, definitely, it is possible for individuals to bounce back from a low CIBIL score. Due to a bankruptcy or default, you may have damaged your credit score in the past. However, that does not stop you from bouncing back and improving your credit score in a better way. A credit score is built on good credit and financial activity over a long period of time. Every small credit activity, like a single payment or a credit account, is capable of improving your credit score. To bounce back, use patience and good credit activities. Whenever you decide to take any kind of loan, the requirement for a good credit score comes up. Without a good credit score, you would only get an expensive loan. There are various financial steps that help you maintain your credit score without much hard work.
A credit score is built on several parameters like payment history, credit utilization, credit mix, credit age, multiple loan applications, and credit accounts. Here’s how you can bounce back from a low credit score with proper CIBIL score check..
- Pay your bills on time
This is applicable to individuals with an outstanding bill or ongoing loan repayment. Payment history is an important factor that helps in building or damaging your credit score. If you want to bounce back from a low credit score, you need to pay your bills in a disciplined manner. Paying your bills on time always helps you maintain a clean record. Repayment history will always help you improve your credit score in a faster way. A good repayment track record is essential to maintaining a healthy credit profile. There are various ways in which you can pay your bills on time without any delay. You can set reminders or automate the payment option if you want to bounce back to improve your credit score. When you automate your payment, the bills are paid on the due date without any delay. This helps you to keep away from any kind of missed payment or default. Since payment is a vital factor, individuals need to pay attention to it.
- Do not keep any outstanding or overdue payments
When you make payment of credit card bills on your monthly instalment of existing loans, pay the full bill amount. Even though you get the minimum amount option, you should not opt for the same. Paying bills without keeping any outstanding or pending amounts will actually improve your credit score. It is true that paying the minimum bill amount is always beneficial. However, when you pay the minimum bill amount, you end up making your loan more expensive and hurting your credit score. When you keep the pending amount, the loan becomes expensive with added interest and charges. Also, the credit score dips by more than 50 points on a single minimum payment transaction. Therefore, individuals trying to bounce back need to make a full bill payment without keeping any overdue amount. With the right activities, it becomes very easy to build credit.
- Do not apply for multiple loan applications
Are you applying for multiple loans just to test your eligibility? If so, you need to stop doing that. When you apply for multiple loans, loan providers run a hard inquiry on your credit profile. Hard inquiries are not a good option for building credit scores. With every hard inquiry run on your credit profile, your credit score dips by 100 points. Therefore, one needs to avoid doing that. For Business Loan visit : business loan apply online.
- Keep your credit accounts open
It is very essential to build your credit if you are planning to take any kind of high-value loan. Home loans or car loans are very popular nowadays. However, without a good credit score, you will not get approval because the principal loan value of these loans is very high. To bounce back and get a good score, you need to keep your credit accounts open. The longer you have credit, the better will be your credit score improvement. If you have a credit score with a long transaction history, it is always beneficial towards building credit. If you keep your credit account open, these active credit accounts in your credit profile will monitor and improve your score.
- Keep your credit utilisation ratio balanced
The credit utilisation ratio is a vital factor when it comes to the credit building process. The credit utilisation ratio is the ratio between the total available credit limit offered and the total credit limit exhausted by the individual. When you exhaust the entire available credit limit, it does not prove credit worthiness and credit eligibility. If you are trying to build your credit profile, you need to keep the ratio below 50%. Make sure you always make part payments and extra payments in order to keep your credit utilisation ratio below 50%.
Check your credit score with Clix Capital!
It is essential to maintain a good CIBIL score with the help of various financial and credit activities. In order to bounce back from a low credit score, the abovementioned factors will help in improving your score. Initiate the free CIBIL score check facility regularly in order to monitor and improve your credit score.