Your creditworthiness is quantified by a three-digit number known as your credit score. Your credit rating and score in your credit report are used by potential lenders to evaluate whether or not to extend credit to you, and if so, how much. Your credit score is a numerical representation of your financial history that helps lenders evaluate the risk associated with lending money to you.
A high credit score improves your chances of obtaining a loan or credit card, whereas a low score destroys them totally. Banks prefer not to issue loans or credit cards to individuals with low credit scores because they do not trust them with money. If you obtain a credit card or loan while having a low credit score, your credit limit may be low or you may be required to pay a very high interest rate. To avoid this, your credit score must be improved. Keep reading to learn about how to check CIBIL score and the ways you can improve a low credit score.
Fixing your credit can be done in a number of ways. Here are just a few examples:
Investigate Your Credit Report
Checking your credit report is one of the essential steps you must take to enhance your credit score. This will assist you in discovering flaws in your report. If you discover errors in your report, you must correct them quickly. As the credit score is derived from the information contained in the credit report, it is crucial that you ensure that this report is error-free.
Pay overdue bills
To repair or somewhat increase your credit score, you must promptly pay off any outstanding credit card bills or loans. The payment history is one of the elements taken into account when determining a credit score. If you have a history of late payments, your credit rating will be poor, and vice versa. To ensure that you always pay your credit bills or EMIs on time, it is advisable to activate payment notifications or an auto-debit service.
Budget your credit
The majority of those whose scores drop significantly are those who do not adequately organize their finances. If you apply for too many credit cards in order to boost your credit limit, but are unable to pay the bills on time, you may end up with a large outstanding debt and a history of late payments, which will significantly lower your credit score.
Beginning a credit history may seem daunting, but it’s time to take the plunge if you don’t already have one. When applying for a job, renting or buying a home, or even buying a car, having a solid credit history can be an asset.
Additional Read:- Impacts of Loan Payment on your Credit Score