CIBIL score determines your worth as a borrower, and any score below 750 makes you a liability in the eyes of the lender. In case your score is less than 750, it is advisable to improve it to increase your credit chances.
In this article, we will detail how to improve your score from 500 to 750.
You can follow the below-mentioned steps to get your score from 500 to 750.
Bad credit such as defaulting on EMIs, or taking too many loans, etc, on your report can lead to a lower credit score. While there is little you can do about bad credit, you can improve good credit and work towards having healthy financial habits to slowly build your score.
Too many unsecured loans can negatively impact your credit score. You should try to balance your portfolio by applying for a secured loan, as it is better for your profile.
Diversify your portfolio with short and long-term loans of unsecured as well as secured nature.
If you are a credit card user, then you can use it to your advantage and easily improve your score. Simply manage the credit utilization ratio of the card without exhausting it every month.
Your credit card spending reflects your financial habits. To be considered a good borrower, you must only use 30% of your credit limit.
Close any unused credit cards and reduce your credit usage if you have too many cards open. It is best to cancel the card with a poor history. Never stop using an old card that has a good history of paying bills.
The consistency of your repayments will directly affect your credit score. If you miss your monthly EMI or pay it a little late, you will incur additional charges and the credit score will drop a little.
With timely repayments, you can see a gradual increase in your CIBIL score and your creditworthiness as a borrower.
Additionally, pay the whole amount due instead of the minimum balance to avoid accruing interest on the remaining balance.
When you approach a lender for new credit, they conduct an inquiry to evaluate your history as a borrower. This is known as a hard inquiry.
Hard inquiries cause credit scores to drop significantly. Multiple credit inquiries from the lender can further lower your chances for credit as they will push your score further down.
However, soft inquiries will not impact your credit score.
Rather than struggling to pay several EMIs every month, you can consolidate your debts and pay a smaller EMI. Not only will this reduce your financial burden, but it will also help you make monthly payments and prevents your score from slipping.
It is important to check your credit report once a month to prevent errors, fraudulent transactions, and discrepancies from negatively affecting your credit score.
Credit score is one of the most important factors in determining your eligibility for a loan or a credit card.
To increase your score from 500 to 750, you must practice healthy finacial habits consustently. It will take some time to see a positive impact on your score, so take correct measures and maintain discipline.
It can take atleast a year or more for your credit score to go from 500 to 750.
Lenders do not extend loans to borrowers with 500 credit score. You must increase it to atleast 650 and above to get credit from online lenders.
There is no quick way to increase your score. However, you can take a small personal loan or credit card and pay your bills or EMIs on time to see a significant increase over time.
You can’t increase your score in 30 days. Your credit report takes 45 days or more to update and even then, you can only see negligible changes.
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