10 Feb How to Bounce Back from a Low CIBIL Score?
It is no more difficult to bounce back from bad credit if you are keen to follow the right steps to set up yourself for financial success by paying off left debt. Although there are many reasons for a Low CIBIL score, likewise there are many ways to rebuild your credit score but which may take time and requires focus on the basics.
Here are the few steps to follow to recover from Low CIBIL Score:
1. Check your CIBIL Score and review it regularly
Before we get into the tricks and tips, it’s important to check your CIBIL report regularly as it helps you to fix the credit score whenever you notice any inaccuracies in the form of defaults or delays in payments. So, that you can always contact the bank and can set right your CIBIL. This will ultimately helps you in increasing the credit exposure.
2. Make the payments always on time
Being late for credit card and loan payments is always the primary reason for a bad credit score, as it is 35% worth of your total. Make it as a top priority to pay off all unpaid debts as soon as you can overcome your personal crisis. If you have various credit cards and personal loan accounts, merge all these loans and take out a single loan to make them pay off.
3. Lessen your present EMIs to 30 percent of your monthly income
Your EMI to income ratio should not exceed 30 per cent of your net salary. Any amount that goes beyond this reduces your financial capacity to repay your loans responsibly. So, it’s better to maintain this ration on your EMIs and construct your credit score effectively.
4. Keep the borrowing to a Minimum
If you’re applying for too many loans or you’re too close to your credit card’s limit then your CIBIL score is likely to drop as such practices indicate a credit-hungry behavior. The best thing to do is not to take out a loan until it is absolutely necessary and always make sure that you are not close to your credit limits. This appropriately helps to recover from bad credit.
5. Enhance your credit score by mixing it up
Never settle down for unsecured loans, i.e. credit cards and personal loans. Go with mixed credit bag as it includes both unsecured loans like personal loans and secured loans likes car or home loans which helps to build a better profile, because banks can recognise that you’re willing to repay the loans irrespective of loan types.
6. Don’t keep applying for credit if it is rejected
Whether you have applied for a loan or credit card, and your request has been denied, the whole information will be recorded in your credit report. When you subsequently apply for loan in some other bank, they will see your low score and the previous rejection, and may refuse your application. In such cases the best thing to do is not submit again and wait until the score improves.
Even though it’s fact that a poor credit score can adverse your future credit requirements, the situation isn’t beyond repair. The only thing you need to keep in mind is that it takes at least a couple of months for the scores to grow, so you need to wait a bit for your scores to show some change.
Remember, a good CIBIL score will help you gain access to credit and loans whenever you need it. To get things right, all you need is patience and diligent effort. Let’s start rebuilding your score and work towards your financial goals and dreams.