Naima and Shaina, two friends with dreams of financial stability, found themselves on a search to improve their Bajaj CIBIL scores to avail a loan from Bajaj or other similar NBFCs. They soon realised the significance of this three-digit number. Your CIBIL score is like a financial report card, influencing your ability to secure loans, credit cards, or even a mortgage. As they began their journey, they discovered top tips to enhance their CIBIL scores. Let’s join Naima and Shaina on their transformative journey to financial empowerment.
Understand your CIBIL score
Naima and Shaina started by understanding how CIBIL score calculation works. Your payment history, credit utilisation, and credit history length play pivotal roles. Access your score and credit report regularly to stay informed.
Monitor credit card balances
Shaina shared another nugget of wisdom – keep credit card balances low. High credit utilisation ratios can lower your CIBIL score. Aim to use less than 30% of your available credit.
Maintain a healthy mix of credit
A diversified credit portfolio can help boost your CIBIL score. Naima decided to have a mix of credit cards, loans, and even a small personal loan to showcase her creditworthiness.
Pay bills on time
One day, Naima missed her credit card payment, and it affected her CIBIL score. Shaina advised her always to pay bills on time, as delayed payments can negatively impact your score.
Avoid excessive credit applications
Naima learned that applying for multiple loans or credit cards in a short span can make lenders skeptical. Too many hard inquiries can dent your score.
Don’t close old credit accounts
Shaina emphasised the importance of keeping old credit accounts open. The length of your credit history matters in CIBIL score calculation.
Avoid settling for ‘settlements’
Shaina warned Naima about settling debts for less than the full amount. While it may provide short-term relief, it can harm your credit score in the long run.
Resolve outstanding debts
Both friends realised that paying off outstanding debts is crucial. Naima decided to prioritise clearing her debts and improving her creditworthiness.
Check for errors in your credit report
Naima found an error in her credit report, which Shaina advised her to dispute immediately. Inaccurate information can drag down your CIBIL score.
Limit new credit card applications
Naima and Shaina realised that opening too many new credit cards in a short time can negatively impact your credit score. They decided to be cautious when applying for new cards.
Don’t ignore old debts
Old, forgotten debts can still affect your CIBIL score. Naima decided to track down and address any outstanding debts from her past.
Don’t co-sign unnecessarily
Shaina shared her experience of co-signing for a friend’s loan, which negatively impacted her credit score when her friend defaulted. Be cautious when co-signing for others.
Set up payment reminders
Naima started setting up payment reminders to ensure she never missed another due date. On-time payments are crucial for a good CIBIL score.
Keep credit card accounts active
Naima understood that closing unused credit card accounts could reduce her overall credit limit, increasing her credit utilisation ratio. She decided to keep her accounts active.
Create an emergency fund
Both friends decided to build an emergency fund. Having savings can help you avoid relying on credit during unexpected financial crises.
Negotiate with lenders
Naima learned that negotiating with lenders for better repayment terms can help her manage her debts more effectively.
Limit credit card cash advances
Shaina advised Naima to avoid using credit cards for cash advances as it attracts high-interest rates and can impact your score negatively.
Don’t ignore old credit cards
Old, inactive credit cards can still contribute positively to your credit history. Naima decided to use them occasionally and pay the bills on time.
Be patient
Improving your CIBIL score takes time. Naima and Shaina decided to be patient and persistent on their journey to financial improvement.
Avoid overusing your credit limit
Both friends realised that maxing out credit cards can have a detrimental effect on their scores. They pledged to keep their credit card balances well below the limit.
Seek professional help
If things get too overwhelming, consider seeking advice from financial advisors who can provide tailored solutions to improve your CIBIL score.
Avoid closing joint accounts
Naima and Shaina had a joint account. They realised that closing it could affect their credit history, so they kept it open and well-maintained.
Stay informed about financial matters
Both friends promised to stay informed about financial matters by reading books and attending seminars to make informed financial decisions.
Plan for large purchases
Planning for significant expenses can help avoid sudden spikes in credit card utilisation, which can hurt your CIBIL score.
Set realistic financial goals
Naima and Shaina decided to set achievable financial goals, which would motivate them to make responsible financial decisions.
Do not ignore old address changes
Ensure that all your addresses are updated with creditors to avoid any missed bills or communications.
Avoid borrowing from high interest sources
High-interest loans can trap you in a debt cycle. Naima and Shaina decided to explore more affordable borrowing options.
Stay organised
Keeping track of bills, payments, and financial documents can help prevent oversights that could harm your CIBIL score.
Be wary of credit repair scams
Shaina warned Naima about credit repair scams that promise quick fixes. They decided to be cautious and avoid such schemes.
Review your progress regularly
Naima and Shaina concluded their journey by emphasising the importance of regularly reviewing their CIBIL scores and credit reports to track their progress.
Ending note
Naima and Shaina’s journey to improve their CIBIL scores taught them that financial empowerment begins with knowledge and discipline. By following these tips, they were well on their way to achieving their financial dreams. Remember, when concerning finance, every responsible step counts. So, start on your journey to a better CIBIL score today, just like Naima and Shaina. Do not procrastinate as this may make you lose out on precious time, which otherwise could have been utilised for securing a healthy credit score of 750 and above.