What is the Perfect Way to Improve the Low CIBIL Score for your Credit Card?
One of the primary credit bureaus, TransUnion CIBIL generates reports linked to credit scores in India. A CIBIL score lets banks and finance companies know about your financial health or creditworthiness.
A CIBIL score is obtained in a range between 300 and 900. A score closer to the 900 figure is considered excellent, while 750 is good. Any score falling below 600 is considered poor and needs rectification. Factors that relate to your CIBIL score should be considered when you wish to improve it.
A major contributor to a low CIBIL score is debt. When using a credit card, it’s not hard to fall prey to debt in case you fail to pay your bills in a timely manner. While there is no specific credit card for a low CIBIL score, there are ways to improve and maintain a decent score to improve your creditworthiness.
Improvement of CIBIL Score
Once you find yourself in debt, you realize that there were ways to prevent it in the first place. Overspending on credit cards and failing to pay bills on time are some of the common ways leading to a debt trap. It can be a vicious cycle, and the only way to prevent it is by paying bills on time, and by avoiding overspending. Nonetheless, it’s easy to get carried away by credit card use and swipe it out of habit. In case you do have debt, you need to be able to be disciplined enough to lift yourself out of it. Debt impacts your CIBIL score and hence, your creditworthiness. In the long run, this can be a deterrent to you getting approved for a loan, for instance. When you use a credit card, it’s important to know its related terms and aspects. For instance, you should ask yourself, “What is a billing cycle, due date, and the minimum amount due?”
Ways to Achieve Good Scores
Here are some ways in which you can improve your CIBIL score. It is important to note there isn’t a single perfect way, but incorporating some of the following can significantly better your financial standing.
- Timely Payment – In case you do have debt piled up, you need to make payments to repay the debt as soon as possible. You can prevent debt by making timely payments on EMIs and bills in the first place, but what do you do if you already have debt? You can take a personal loan, but this just buys you time, and you will need to pay loans eventually.
- Maintain Older Credit Cards – If you have more than one credit card, see that you maintain them by paying any annual fees or charges. A credit card for a low CIBIL score could take the form of a balance transfer credit card. If you do have access to another credit card, you can transfer your debt amount onto the new card, thereby giving you time to pay, and getting your CIBIL score up. However, you should note that this just buys you more time, and you will eventually have to settle your bill.
- Prevent Debt – You can set reminders on your smartphone for payment of bills. Cards like the Bajaj Finserv RBL Bank SuperCard send reminders through the RBL MyCard app for bill payment. You can also customise your cash limit on your credit card to restrict overspending. Knowing what a billing cycle (the duration when you can spend without interest on your card) helps, and you can plan to spend accordingly. For example, you can customise your billing cycle to end just before your salary is deposited, so you can make payments easily.
- Check Your CIBIL Report – There are times when your CIBIL report shows low scores due to technical errors. You should check your report and rectify any errors at the earliest.
The Bajaj Finserv RBL Bank SuperCard is an excellent multipurpose card, which can be used as an EMI card or a cash card. You can also avail of loans against the available credit limit for up to 90 days, with a nominal interest rate of just 1.16% per month.