Image Source : PIXABAY There are four main credit bureaus in India.
Improve credit score: Credit score is an important factor when a lender approves your application for a loan or credit card. It not only decides whether your loan will be approved or rejected but is also an important facet of the process that decides the interest rate of your loan. The stronger the credit score, the better the interest rate you will get from the bank.
Credit score
There are four main credit bureaus in India – Credit Information Bureau (India) Limited (CIBIL), Equifax, Experian and CRIF Highmark. However, CIBIL is the most prominent among them.
What is a good CIBIL score?
Anything above 750 is considered to be an excellent CIBIL score while one in the range of 650-749 is considered to be good. A score in the range of 500-649 is considered average and below 499 is poor.
How to improve credit score?
Here are five easy steps that one can follow to improve his or her credit score
Pay on time – The easiest and most effective way of improving your credit score is to pay all your credit card bills and EMIs on time. Even a single delayed payment hurts your credit score.
Credit utilisation ratio – It is always advisable to not avail of the entire available credit card limits. According to financial experts, utilising less than 30 per cent of the credit card limit is considered ideal. For example, if your card limit is Rs 1,00,000, spend up to Rs 30,000 in a month.
Clear all your existing debt – Having any outstanding debt will harm your credit score until you repay it. So, repay your debt as soon as possible and this will help you improve your score.
Limit new applications – Do not apply for loans or credit cards multiple times in a short period. Doing so leads to repeated hard inquiries, which can lower your score.
Keep old credit accounts active – Often people close old credit cards or accounts. However, doing so can negatively impact your score. Keeping old accounts active lengthens your credit history, which helps increase your score.
