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People with a poor credit or CIBIL score may only get an approval for a credit card or any other financial products that require good credit score when the credit score improves to a satisfactory level for banks. In such a case, enhancing the credit score becomes vital and yet it cannot be done in haste. It takes a minimum of 12 to 18 months to enhance one’s credit score and get to a number that gives confidence to the financial institution you are about to apply for a loan or a new credit card. Also, it is important to note that the quantum of damage on your credit score also acts as a factor for how long it will take to improve your credit score. Often banks and financial companies have a different CIBIL score bracket for various products.
Here are some things an individual can do for damage control on credit score:
Nobody can hence accurately predict the time required to enhance an individual’s credit score. Credit improvement is however not too difficult if the effort is consistent over a long period of time. The main deal with improving credit score is taking care of the factors that affect your credit score.
Generally, a credit score of 750 and above is considered as ideal by the majority of banks and non- banking finance companies. A healthy credit score indicates that you can be trusted with credit. However, different credit bureaus have different ranges. Let’s take a look at different credit score ranges.
If you have no credit history or you do not have enough credit history to be scored. This indicates that you are a new to the credit rating system.
If you have a credit score in this range, it suggests that you have not been responsible with your repayments and have several debt. It also means you have not maintained a high credit utilization ratio for a long time. Such customers with indicate a high risk of default and lenders will be wary of extending credit.
If you have a credit score in this range, it indicates that you have defaulted payment for a good number of times. Therefore, you will fall in the risk bracket to turn a defaulter as well.
A credit score in this range indicates that you have a record of consistent repayment history and a better understanding of handling credit. This also suggests that you have a sound financial health and are less likely to default credit.
With this credit score this high, lenders will know that you are at a very low risk of turning a defaulter. It also suggests that you have consistently displayed an excellent repayment behaviour and maintained a low credit utilisation ratio.
With a credit score of 850 and above, it suggests you have been on top of your game in terms of handling the credit and having mixed type of credit. A high credit score of 850 will put you in a position to receive the best deals related to credit cards and loans.
A credit score is calculated based on various factors like timely repayment of loans, credit utilisation, length of the credit history, etc. A higher credit score shows a person's creditworthiness and improves his chances of getting a loan approved.
Yes, the credit score decreases if you apply for multiple credit cards in a short span of time. This is because, each time you apply for a credit card, the card issuer company requests your credit report from the credit bureau. This gets registered as a hard enquiry which negatively affects the credit report.
A credit card can act as an effective tool to boost credit scores if used wisely. You need to keep your credit utilisation ratio within 30%, repay outstanding dues on time, and avoid applying for multiple credit cards in a short period. These simple steps will surely help you raise your credit score in the long run.
The late payment history reflects on the credit report for up to seven years and decreases the credit score. To minimize its negative effect on the credit score, make sure that you do timely repayment of the outstanding dues.
There are four companies that provide credit reports in India - TransUnion CIBIL, Experian, Equifax, and CRIF Highmark.
A credit score is a measure that banks look at to calculate a person's creditworthiness, while TransUnion CIBIL is one of the four companies that provide credit reports in India. A CIBIL score is the credit score calculated using the credit history as per the CIBIL report.
Yes, credit scores do differ across credit bureaus. This is because each credit bureau has a different algorithm for calculating the credit scores. The underlying principles for credit score calculation is same for all bureaus. However, the variables considered for evaluating the scores vary from one credit bureau to another.
No, the credit bureaus count the closing of an old credit card as a negative move. It is advisable to keep your card active with minimum transactions even if you are not using it.
No, as debit cards do not contribute to creating a credit history, the debit card transactions are not counted for calculating the credit score.
You, as a customer will receive a summarized credit report mentioning only the required point. It does not matter if the report is paid or free. However, the lender will have access to a much more detailed report.
CIBIL Related Articles
TransUnion CIBIL is one of the leading credit information companies in India. The company maintains one of the largest collections of consumer credit information in the world. CIBIL Score plays a key role in the lives of consumers. Banks and other lenders check the CIBIL Score of the applicants before approving their loan or credit card application. Consumers can visit the official website of CIBIL to check their CIBIL Score and Report.
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