Your credit score is only a numeric representation of the history concerning credit. This involves your repayment track and borrowings. CIBIL score of 750 or above is looked at as good and enhances your creditworthiness, allowing you to avail of your loan at favourable terms and conditions with zero hassle. However, a credit score of below 750 is looked at as low, and when you submit a loan or credit card application with such a credit score, it becomes tough for you to avail the credit at your terms and conditions. There are also chances your application for credit may face instant rejection. But you do not have to fret; here are some tricks and tips to ameliorate your credit score in 2022.
Before that, let us solve the most asked question – how can I check my credit score? This is one of the searched queries by new credit applicants; they often wonder how I check my credit score. One of the simplest or easiest ways is to visit online financial markets. Such online marketplaces provide you with monthly free Equifax credit score, CIBIL credit score, and credit report through other bureaus. An alternative way is to directly approach the bureaus like CIBIL, Experian, CRIF Highmark and Equifax. However, note that free Equifax credit score, or free CRIF HighMark, CIBIL or Experian credit report can just be availed once a year. After this, you will have to pay to avail credit reports from these 4 bureaus.
Now, let us dive into ways about how you can improve your credit score in 2022:
Avail credit reports periodically through online financial markets or through credit bureaus
The initial step towards ameliorating your score begins with reviewing to know your score. You cannot proceed until you know your credit score. Note that it stands true for all credit scores through 4 credit bureaus. You cannot begin working until you know that it requires improvement. As stated above, you can avail your credit report from all 4 bureaus. But as only 1 report is free per year for every bureau, you must distribute your fetches in such a manner among 4 bureaus so that you can avail of 1 free Equifax credit score or free CIBIL credit report every quarter. Alternatively, you can also visit online financial markets like Paisabazaar, Bank Bazaar, Bajaj Finserv, Tata Capital, Wish fin, IndiaLends etc., every month for a free credit report.
Check for accuracy
After you avail your credit report, the next measure you must do is to review its details in depth. Ensure that all data or information stated is accurate and correct. Even one error, discrepancy or mistake in your credit report can result in a negative effect on your credit score. Thus, be careful while checking all your details mentioned in the report. If you figure out any negative data or information, you can directly approach the respective bureau or lender with proof to correct the data mentioned in your credit report. Steady implementation of this measure assures instant credit score correction. Note that you can approach them through a call or directly write a letter with the relevant proofs in support of the incorrect information stated on the credit report. Once received by Experian, CIBIL, CRIF HighMark or Experian, they will make the correction shortly, which you can view in your upcoming reports.
Avail credit card if you have no credit history
In case you have no credit history, you can opt for a credit card, to begin with, your credit score building process. If you are unable to avail of a regular credit card due to no or low credit score, unserviceable location, low income etc., you have the option to opt for a secured credit card, which is a card available against your fixed deposit. Like regular credit cards, transactions and repayments made through secured credit cards are reviewed by the bureaus to set your credit score. Once your credit score enhances or improves, you can opt for a regular credit card or other credit cards for which you were ineligible due to no credit score. However, ensure to follow good credit behaviour to maintain a score even after you avail a regular credit card.
Those with poor credit scores despite a credit card must analyze why their score is low and should work towards maintaining a good credit score.
Timely credit repayments
Ensure that you repay your loan EMIs and credit card dues on time. To make this more convenient, ensure to set standing instructions for automatic due deduction by the due date from your savings account. This allows you to make timely repayments without fail. Also, in the case of credit cards, ensure to spend just the amount that you can repay to avoid the inability to repay the dues on time.
Pay full due by the due date for credit cards.
In case you are unable to clear your whole credit card, ensure to convert the outstanding due amount into EMI. Doing so allows you to avoid the heavy finance charges of 52 % p.a. on credit cards and late payment fee on the MAD non-repayment of up to Rs 1300 per month by the due date. Conversion of outstanding dues into EMI comes with a comparatively lower interest rate of between 12 and 24 percent p.a., which is extremely less than the finance charges on credit cards. However, being debt-free is always recommended and hence always ensure to spend just the amount you can repay through credit card and not overspend.
Do not apply for the credit repeated if it is rejected once
Whenever you apply for credit, creditors/lenders enquire about your credit score to understand your credibility. Suppose your credit application gets turned down by two lenders, and you continue applying for a loan with various other lenders. In such cases, your credit score will fall by a massive number. Thus, whenever you plan your loan, the crucial thing is to check your score. In case you find it on the lower end, follow the above measures to ameliorate it. And then, visit online financial markets to compare among lenders or creditors as per your credit score, income, and other parameters to select an apt lender/creditor for application. Application through such platforms does not impact your credit score as it is looked upon as a soft enquiry.