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Business News/ Money / Personal Finance/  Poor credit score improvement: 7 simple steps to enhance your CIBIL score
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Poor credit score improvement: 7 simple steps to enhance your CIBIL score

Poor credit score improvement: If you have any outstanding accounts, bring them current as soon as possible. So, it is recommended to contact your creditors and discuss the options of repayment.

Poor credit score improvement: One should focus on paying down credit card debt to lower the credit utilisation ratio (CUR). Premium
Poor credit score improvement: One should focus on paying down credit card debt to lower the credit utilisation ratio (CUR).

Poor credit score improvement: Improving a poor credit score is a slow process, however, it's very much achievable with consistent effort. To begin, you should first check your credit report and review it carefully to find out if there are any errors in the report and fix them, if any. Among the regular efforts to be taken are paying bills on time, reducing credit card balances, and more.

These are some of the steps recommended to take:

Credit report: Get a copy of your credit report from CIBIL. Review the same thoroughly in order to identify any errors or inaccuracies which could be negatively impacting your credit score.

Address delinquent accounts: If you have any accounts that are past due, bring them current as soon as possible. Contact your creditors to discuss repayment options or negotiate settlements if necessary. 

Dispute errors: If you find any errors on your credit report, file disputes with the credit bureaus to have them corrected. This may involve providing documentation to support your claim. Correcting errors can potentially boost your credit score.

Reduce credit card balances: High credit card balances relative to your credit limits can harm your credit score. Focus on paying down your credit card debt to lower your credit utilisation ratio. Aim to keep your credit utilisation below 30% of your available credit.

Avoid opening new accounts: While it may be tempting to apply for new credit, avoid doing so if you have a bad credit score. When you open new accounts, it can result in hard inquiries on your credit report that can lower your score temporarily.  

Secured credit card: If you fail to qualify for a traditional credit card, you can explore the option of applying for a secured credit card. These cards require a security deposit, which reduces the risk for the issuer and makes them more accessible to individuals with bad credit. 

Have patience: Improving a bad credit score takes time and effort. Stay committed to responsible financial habits, such as making timely payments and keeping balances low, and monitor your progress regularly. Over time, your efforts should be reflected in an improved credit score.

By taking these immediate steps and maintaining responsible financial habits, you can begin to rebuild your credit and work towards achieving a better credit score.

ALSO READ: From high interest rate to limited funds, 5 main consequences of a low credit score

Frequently Asked Questions:

What is ‘raising a dispute’ with the credit rating agency?

In case there are errors on credit report, you can file disputes with the credit rating agency to get it rectified. 

What is credit utilisation ratio?

This is the total debt relative to your credit limit. It is important to bring your debt down to lower your credit utilisation ratio.

Does secured credit card help in improving credit score?

If you are unable to qualify for a traditional credit card, consider applying for a secured credit card. Secured cards require a security deposit, which reduces the risk for the issuer and makes them more accessible to individuals with bad credit. 

Should you open new account if you have a bad credit score?

It is not advisable to open new accounts when the credit score is bad. While it may be tempting to apply for new credit, one should avoid doing so.

Why should you reduce credit card balance when your credit score is poor?

High credit card balances can harm your credit score. So, it is recommended to pay down your credit card debt in order to improve your credit score. 

 

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Published: 12 Mar 2024, 05:23 PM IST
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