Your CIBIL score has immense significance in determining whether you are eligible or not. If you have a CIBIL score of 750 and above, you can easily avail a loan at attractive interest rates. CIBIL scores are generated based on your credit history which includes your credit statements and payment records. An individual with a low score will be considered a risky borrower and lenders will be hesitant to approve your loan and might lead to rejection of your loan application.
Ways to stop your CIBIL score from declining
Apply for credit only when you need it
Personal loans are an easy way to avail instant cash. But ensure to apply for a loan amount that you will be able to repay in time. So, you need to avoid temptations at all costs, by putting the money to good use. You can use the loan amount to clear your outstanding bill and other payments. If you fail to make your loan repayments on time you will have to face severe consequences on your credit score. Thus, you need to be well aware of your finances and the capability of repaying the loan in a timely manner. Making this a habit will help you in managing your finances and payments in the long run and gradually help to improve your score.
Keep a low credit utilization ratio
The credit utilization ratio is the proportion of total credit card limit on your credit card. If your credit utilization ratio is over 30 percent you will be seen as someone who is credit hungry and hence, Credit Bureaus will reduce your credit score on breaching this limit, thereby reducing your loan eligibility. Hence, to avoid such situations, you need to make sure your credit utilization ratio is below 30 percent.
Pay your monthly outstanding debt in full
Make a list of all the outstanding debts and payments and as soon as you overcome your financial crisis, you can start clearing out all outstanding dues. Decluttering and organizing your finances, will help you in making payments easily. Doing this will lead you in a better situation where you do not have to worry about multiple pending payments and due dates.
Keep a track on your expenses
In times of financial crisis, when you run out of your monthly savings, you are tempted to max out on your credit card to get the money. This can be a good idea to overcome the lack of funds only if you use it cautiously. It’s best to keep a low balance and apply for more credit only if it’s necessary. Rather than having more cards in your wallet, consider using the old credit cards you already have. Also, ensure timely repayments to maintain a good credit score.
Check CIBIL score
Your CIBIL report keeps a track of your past repayment on loans and credit cards. The lenders make the final decision based on your score by considering your past credit behavior along with your present activity to determine your ability to repay the loan in the future. If you have a low CIBIL score, your loan application might get rejected or you may be charged with a high-interest rate on the loan. With a good CIBIL score, the lender gets convinced that you will be able to repay the loan on time. Hence your loan has higher chances of getting approved.
When applying for a personal loan, there are a lot of options for loan providers in the financial market. Do your research and compare your personal loan options to find lenders that you may be eligible for and can fulfill your loan requirements.
Make sure to do a CIBIL Score check and verify the report at least twice a year to identify any errors or misinformation. At Finserv MARKETS you can apply for a personal loan and get access to features like low EMI, minimal documentation, quick approval and disbursement of loan amount. Your online personal loan application can be approved within minutes and the loan amount can be credited to your bank account within 24 hours! Your credit score determines your creditworthiness; you can check CIBIL Score for free and access your customized Financial Health Check Report (FHCR) on Finserv MARKETS.
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