Having a low CIBIL Score can be a worry, especially when you need help with business finances. As far as CIBIL Scores are concerned, an excellent score is 750 and above. A higher credit score helps you get better and faster business loans. NBFCs and Banks use the CIBIL score to check your loan reliability. But if your CIBIL score is lower than 750, don’t start stressing. Instead, focus on ways to improve the CIBIL score.
Ways To Improve The CIBIL Score
These 7 smart moves can help you improve your credit score. Also, remember to keep a tab on your Loan EMIs and monthly credit card payments.
Timely payments
Make sure to pay your bills and EMIs on time. Late payments don’t just cost you extra, they also make your credit score drop. Consider using tools that can pay your bills automatically so you won’t miss any due dates.
Use Credit Wisely
Be smart about using credit. Take on only a few debts at a time. Focus on paying off one loan before you think about getting another. Carrying the load of multiple loans simultaneously could make you struggle financially which damages your credit score. Successfully paying off a loan helps improve your credit history.
Diversify your Credit
It’s advisable to have a mix of different types of loans. Some, like home or auto loans, are secured, while credit cards are unsecured. Having a balance is better than heavily relying on one type.
Apply for Credit within Limits
Only apply for new credit when you need it and have the financial planning pay it back. One too many active loans could hurt your credit score big time.
Monitor Joint Accounts
Be careful with shared accounts. If someone you share an account with misses out on a payment’s due date, it not only affects theirs but your credit score too. Think twice before sharing accounts or being a loan guarantor.
Check Your Credit Report Regularly
Keep an eye on your credit report to not miss out on potential mistakes. Sometimes, an error by the company which sold you a credit card could hurt your credit score. Fixing these errors promptly is crucial.
Build a Positive Credit History Gradually
Take your time in building a good credit history. If you have a loan, consider making the repayment period longer to keep your monthly payments manageable. Increasing your credit limit can also help, as long as you spend only a little. Over time, these steps will help you build a strong credit score for better business opportunities.
In summary, improving your credit score is a gradual yet crucial process which significantly impacts your ability to secure favourable business financing. By adhering to smart financial practices, such as paying bills on time, using credit wisely, and diversifying credit types, you can steadily enhance your CIBIL score. Monitoring joint accounts, applying for credit within limits, and regularly checking your credit report are essential steps to safeguarding and boosting your creditworthiness. As it takes a long time to build a positive credit history, patience is key in ensuring sustainable improvements. Ultimately, a higher credit score opens doors to quicker and more competitive business loans, providing financial stability and enhanced opportunities for growth in your business.
