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Credit score can be damaged if you do not maintain a healthy credit history. It is not easy to improve a poor credit score and takes time for it to normalise. Nevertheless, following some simple measures can help you improve your score. Spending less, paying off existing debt, paying dues on time and refraining from new card/debt applications can help in the long run. Also remember to check the correctness of your credit report to rule out poor scores due to mistakes.
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No one wants a poor credit score. Credit Information Bureau India Limited or CIBIL maintains the credit history of all borrowers in the country and provides the Credit Information Report or CIR to all banks and financial institutions. If your credit score reflected in the Credit Information Report is low, then you will obviously face a problem in obtaining new loans or credit cards, and will hamper your credit standing. There are credit counselling agencies which will develop customized plans for you and help in correcting your credit history. But what can you as an individual do to improve your situation? Here are some Do-It-Yourself techniques which can help in improving a poor credit score.
Check your credit report: Many a time, people don’t realise that a poor credit score can be because of a mistake in your credit report. You may have paid off a loan or closed a credit card and think that all is well. However, if the bank fails to update its records and/or fails to inform CIBIL, then this will result in a poor credit score. So check your credit report for any mistakes first. If you find some mistake, then you can make use of the dispute resolution facility with CIBIL. Please click here to fill the online dispute form and sort out the problem.
Check your credit report: Many a time, people don’t realise that a poor credit score can be because of a mistake in your credit report. You may have paid off a loan or closed a credit card and think that all is well. However, if the bank fails to update its records and/or fails to inform CIBIL, then this will result in a poor credit score. So check your credit report for any mistakes first. If you find some mistake, then you can make use of the dispute resolution facility with CIBIL. Please click here to fill the online dispute form and sort out the problem.
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If the problem of a poor credit score is not due to a mistake in your credit report, but because of your past credit behaviour, then you can take the following remedial measures to improve the situation:
Cut down your expenses, atleast till the situation normalises: When expenses are high and unnecessary, it spells trouble for any person. More so if you want to improve your credit score. Spend less and save more – this can leave you with more cash to pay off dues. You must also try and avoid new credit card purchases and use cash instead. Spending less on your credit card also means that you are not very high on your utilisation limit, meaning your credit score is not affected negatively. You simply need to watch your expenses and inculcate discipline is setting aside some amount for repayments. When you are on the path to improve your credit score, this is the first task you must focus on.
Start paying off the outstanding debt: Reducing your existing liabilities can push up your score. When you promptly service your loans, it shows that you are disciplined and serious about improving your credit standing. Similarly, if you have a high credit limit on your card and use a major portion of this, then it reflects badly on your score. So begin to off your debt, preferably starting with large, unsecured loans.
Pay your dues on time: One of the main reasons why a credit score deteriorates is if you do not pay your dues on time – be it your EMIs or your credit card bills. A missed instalment or payment can damage your score and have severe repercussions, especially if it goes beyond 90 days due. So remember to start paying your dues on time. Keeping reminders or automating payments from your savings account can solve this problem to a large extent.
Avoid applying for a new card: Having multiple credit cards can be fashionable; but it only increases stress and also increases chances of a credit default. You may miss out on payment due dates if you have many cards. When you are trying to repair your credit score, you must not apply for a new card as new credit enquires can further harm your credit score. Also use older cards first, as your old card has a longer credit history. When there is a history of good payment track record, it can improve your score.
It is very easy to get a poor credit score, but quite difficult to improve it. You must remember that there is no overnight solution and it will take a considerable period of time to normalise the situation. Perseverance, credit discipline and conscious financial planning can help you improve your credit score over time.
Cut down your expenses, atleast till the situation normalises: When expenses are high and unnecessary, it spells trouble for any person. More so if you want to improve your credit score. Spend less and save more – this can leave you with more cash to pay off dues. You must also try and avoid new credit card purchases and use cash instead. Spending less on your credit card also means that you are not very high on your utilisation limit, meaning your credit score is not affected negatively. You simply need to watch your expenses and inculcate discipline is setting aside some amount for repayments. When you are on the path to improve your credit score, this is the first task you must focus on.
Start paying off the outstanding debt: Reducing your existing liabilities can push up your score. When you promptly service your loans, it shows that you are disciplined and serious about improving your credit standing. Similarly, if you have a high credit limit on your card and use a major portion of this, then it reflects badly on your score. So begin to off your debt, preferably starting with large, unsecured loans.
Pay your dues on time: One of the main reasons why a credit score deteriorates is if you do not pay your dues on time – be it your EMIs or your credit card bills. A missed instalment or payment can damage your score and have severe repercussions, especially if it goes beyond 90 days due. So remember to start paying your dues on time. Keeping reminders or automating payments from your savings account can solve this problem to a large extent.
Avoid applying for a new card: Having multiple credit cards can be fashionable; but it only increases stress and also increases chances of a credit default. You may miss out on payment due dates if you have many cards. When you are trying to repair your credit score, you must not apply for a new card as new credit enquires can further harm your credit score. Also use older cards first, as your old card has a longer credit history. When there is a history of good payment track record, it can improve your score.
It is very easy to get a poor credit score, but quite difficult to improve it. You must remember that there is no overnight solution and it will take a considerable period of time to normalise the situation. Perseverance, credit discipline and conscious financial planning can help you improve your credit score over time.
Smitha Hari
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