asking for a credit card or a loan, your credit score is one of the few
significant elements that lenders consider when determining your
trustworthiness. A lender examines your loan repayment capabilities based on
your credit record.
Paying your bills on
time has a beneficial effect on your credit score. However, if you fail to make
timely payments, defaults will be noted in the DPD section of your credit
report. Your CIBIL score will begin to deteriorate, and lenders will refuse to
approve your application.
If you're wondering
if your low credit score has landed you on the 'CIBIL Defaulters List,' you
should know that CIBIL does not have a defaulters list. In truth, neither CIBIL
nor any other credit bureau maintains a record of defaulters.
To avoid being
labelled as a 'Defaulter,' you must raise your credit score. Here are some tips
that can help you with doing it.
Check Your Credit Report
Your credit report
is a key factor in determining your financial health. Check it regularly to
make sure all the information is accurate.
If you find errors
on your credit report, take steps to correct them right away. This will help improve your
CIBIL score and financial health.
Checking your credit
report is an excellent way to catch identity theft early. If you see something
that doesn't look right, investigate it immediately.
Clear Off Your Dues
If you have any
unpaid dues, it's time to clear them off. Not only will this improve your
financial health, but it will also boost your CIBIL score.
When you have
outstanding dues, it reflects poorly on your financial health and discipline.
This, in turn, hurts your CIBIL score, which lenders use to assess your
Paying off your dues
shows that you're committed to improving your financial health. This sends a
positive signal to lenders and can lead to an improvement in your CIBIL score.
In addition to
improving your CIBIL score, paying off your dues also helps improve your financial
health. This is because you'll no longer have the burden
of debt hanging over your head.
Pay Your Bills on Time
You can improve your
CIBIL score by paying your bills on time. Overdue payments can significantly
impact your score, even if they are just a few days late. Lenders report late
payments to the credit bureaus, which then lowers your score. So, if you want
to improve your CIBIL score, make sure to pay all your bills on time, including
your mortgage, car loan, credit card, and utility bills.
Spend as Per Your Credit Limit
When rebuilding your
credit, pay down all credit accounts with balances greater than 25% of the
credit limit. CIBIL defaulters who frequently use credit cards to make payments
should keep track of how much they spend on them. Make sure you don't spend
more than 50% of your credit limit because it demonstrates a lack of discipline
and raises questions about your financial ability to pay off your payments,
lowering your credit score. As a result, you must exercise caution when using
your credit card.
Take Loans One at a Time
In today's world,
it's easy to get overwhelmed with bills and expenses. Many people rely on loans
to help make ends meet. However, taking out multiple loans can be dangerous,
and it makes you look like a credit-hungry person. It's important to take loans
one at a time so that you can stay on top of your finances.
If you have more
than one loan, keeping track of all the payments can be challenging. You might
miss a payment or make a late payment, which can damage your credit score. You
also have to pay more in interest and fees when you have multiple loans. This
can put a strain on your budget and make it harder to pay off your debt.
Taking out multiple
loans can also signal that you're struggling financially. If you're having
trouble making ends meet, you must talk to a financial advisor or counselor.
Nanda is a financial analyst who currently lives in Bangalore (refusing to
acknowledge the name change) and works with MoneyTap, India's first app-based
credit-line. Shiv is a true finance geek, and his friends love that. They
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and personal financial matters, and when they want to get a loan. He has made it
his life's mission to help and educate people on various financial topics, so
email him your questions at firstname.lastname@example.org.