Improve Your Credit Score Before Applying for a Personal Loan

Thinking about applying for a loan without looking at your credit score can’t be a right option. Your loan application is heavily influenced by your CIBIL Score. If your CIBIL score is low, it might be tough to get loan immediately but a higher credit score can land you at an easy place if you want to receive a credit card or a personal loan.

Obtaining credit cards with additional advantages and loans with comparatively cheaper interest rates can both be facilitated by having a high credit score.

The majority of lenders reject credit applications from candidates with low credit scores (600 or lower). The loan applicant must pay interest at a higher rate even if their application is granted. You should pay close attention to the following guidelines if your CIBIL score is low and you want to raise it so you can get credit and we can help you in getting your best personal loan offer.

Credit Score Range	Rating	Risk Level
750-900	Excellent	Very low
650-749	Good	Low
550-649	Fair	Average
300-549	Poor	High

Essential Strategies to Boost Your Creditworthiness(Credit Score)

There is no quick fix for raising your credit score. You must always adhere to our few guidelines if you want to progressively raise your CIBIL score. If you sincerely adhere to these easy procedures, you can raise your credit score and be eligible for credit in the future which can help you in availing a personal loan from us:

1. Prompt Payment: Ensuring Timely Loan Repayments

You will suffer credit score consequences if you are unable to make your loan EMI payments on time. When it comes to making your credit card or loan EMI payments on time, you must be mindful of the situation. In addition to paying the penalties, missing or late EMI repayments could cause a sharp decline in your credit score.

The best strategies to prevent payment delays are to add Standing Instructions (SI) to your bank account, which will allow a defined sum to be withdrawn from it regularly (usually once a month), or to establish reminders to repay on time.

2. Debt-Free Living: Clearing Credit Card Balances Promptly

Make a deliberate effort to pay off your credit card debt by the due date. Nonpayment of dues substantially negatively impacts your CIBIL score, and repeated defaults can quickly lower your credit score below 600.  Failure to meet the deadline will show up in the Days Past Due (DPD) section of your CIBIL credit report.

To prevent the card issuer from reporting the non-payment of the entire balance owed to the bureau, you should attempt to pay the minimum amount owed if you cannot make the full payment by the deadline. You will receive an extra payment cycle to pay off your outstanding balance and keep your credit score from declining, even if the outstanding amount will begin to accrue interest for that billing cycle.

3. Credit Report Accuracy: Verifying CIBIL Information

Even if you have a clean credit history, your credit score may nevertheless suffer from several unidentified mistakes. These mistakes could involve inaccurate personal data, incorrect account information, mismatched amounts that are past due or paid off, duplicate accounts, inaccurate Days Past Due information, erroneous collateral information, etc.

For instance, even though you have fully paid off your loan and cancelled the account on your end, the lender’s administrative error has caused it to be listed as currently owing. This will lower your credit score heavily. You must also keep an eye out for any additional mistakes or questionable activity.

To rectify these mistakes, file an online grievance with CIBIL. Once these errors are fixed, your credit score can go up a lot.

4. Credit Application Prudence: Limiting Frequent Inquiries

Credit inquiries come in two flavours: soft inquiries and hard inquiries. When you check your credit score to become credit aware, it is regarded as a soft inquiry. It does not affect your credit rating. It is regarded as a hard inquiry when a lender or credit card company obtains your CIBIL credit report from the credit bureau about your credit application.

Your credit score won’t likely be significantly impacted by sporadic hard inquiries. On the other hand, a string of hard inquiries made quickly indicates a credit-hungry nature. Such candidates may be viewed by lenders as having financial troubles and consequently a comparatively higher chance of credit default. This could ultimately result in the lender or card issuer rejecting your credit application.

The credit score of candidates who have made several hard inquiries in the recent past is subsequently reduced by credit bureaus. Therefore, if you want to apply for a credit card or loan, make sure you do your homework, weigh your options, and apply to just one lender. Try to raise your CIBIL score before applying for credit if you have a low credit score and can’t wait to take out a loan.

5. Building Credit with a Secured Credit Card

Credit scores can be considerably lowered by settled credit accounts and late payments. Such applicants would not be preferred by any lender to receive a credit card or loan. Before applying for the loan product, you will need to raise your creditworthiness by rebuilding your credit score.

You may choose a secured credit card instead of a set deposit in such circumstances. In this case, the credit score is not taken into account so the secured credit card application will be approved quickly. Once you get it you can start fixing your credit by using it cautiously and paying the bills on time. Even if it may not show a rise right away, your credit score might still be profitable for you in the long run.

6. Credit History Preservation: Keeping Old Accounts Open

Bank trust applicants who have lengthier credit history and pay on time. So if you no longer use your old credit card account, it is advisable not to close it. When a lender reviews your application in future, this can be a useful aspect, although it does not directly impact your credit score.

7. Joint Account Oversight: Keeping Tabs on Co-signed Loans

There is a provision where a co-applicant having a higher credit score can co-sign or guarantee the loan if the applicant is not eligible. This is usually done to encourage the guarantor to pay the remaining amount that the borrower is unable to pay.

If EMI is not paid on time, both the co-signors and borrower’s credit scores will be negatively impacted. So if you are a guarantor you must keep a check that EMIs are being paid on time and if there is a default in the payments, you should speak to the borrower about it.