Have you come across any scenario where your known associate was looking for urgent funds but couldn’t get through the same from anybody and at last had to take it from a neighbouring moneylender? If you don’t want a similar situation happening to you or you want to be credit ready for the future, it is imperative you work on improving your credit score. Just like everything in life, improving a credit score takes time.
For the unversed, credit score is the score maintained by the credit rating agencies. It indicates an individual’s credit worthiness. It means your capability to pay back loans on time without default. CIBIL score is a widely respected credit rating in India on which most of the lenders, such as Cashe Loan, depend while sanctioning loan to you. A credit score of 750 is considered to be a good credit score, a 900 score is the excellent you can go for, and anything below 600 is considered poor. So, if you have a low credit score or want to be credit ready for the future, the following tips will help you to do so:
Debt Consolidation: There could be a chance that you have taken multiple loans in the past at a higher interest rate. It is a juggle to pay multiple loans and remember different dates at the same time. It might have happened to you that in the past, you had forgotten the date of EMI and didn’t pay the loan amount on time, and that might have affected your credit score as well. Hence, if you have too many loans running simultaneously at different interest rates, you can take a personal loan from Cashe Loan of a large sum and use it to pay the existing loan. This is called debt consolidation, where you will be consolidating your different loans into one single personal loan. If, for example, the loan you avail of from the Kreditbee loan is at a lower interest rate, then not only does the debt consolidation option reduce your monthly outgo, but it also reduces your burden of remembering different dates at the same time.
Helps you to build credit history: Personal loans such as Cashe Loan can greatly help you improve your credit history. Longer credit history usually indicates that you have been responsible for credit. This, in a way, will help to strengthen your credit score and profile if you wish to avail larger sum of money in the future. To build a credit profile, borrowing is important as it helps to build your credit history, which is important to take your credit score a notch above. If you haven’t borrowed to date, you won’t have any credit history to show to your lender. Taking a personal loan from Kreditbee loan or any other platform is a good start for building your credit history.
Timely Repayment: This cannot be stressed enough, considering how often people take this for granted. Timely repaying your Kreditbee loan or any other type of loan you availed can benefit you in ways you cannot imagine. For the unversed, timely repayment of dues is a sign of good credit behaviour. It shows you are financially disciplined that ultimately helps to improve your credit score. Repaying your debt on an unsecured personal loan can even make a stronger impact on one’s credit score. Hence, have a mix of different types of loans under your belt. While calculating a credit score, the formula sees through the overall credit mix of a borrower. Lean too much on one type of Cashe Loan, and it can affect your credit score to go down. Just like they say, don’t put all your eggs in one basket. Thus, it is suggested to have a mix of unsecured and secured credit in your portfolio that can help you diversify.
Reduce your loan on a credit card: For example, you have a limit of credit set by the bank, and if you keep borrowing to the maximum limit available to you, it will affect your credit score badly in the longer run. Taking a personal loan from Kreditbee loan or from any other financial institution not only can take the pressure of financial emergency off your shoulders, but it can help you improve your credit score.
While you are being educated on how a personal loan from Kreditbee loan or from another financial institution can help you improve your credit score, you should also know about how it can negatively affect your score as well.
Too many inquiries on your credit report: Before sanctioning a loan to you, lenders such as Cashe Loan will issue a hard inquiry on your credit report to analyse your creditworthiness. Generally, one or two inquiries won’t impact your credit score too much, but a series of hard inquiries can have a negative impact on your credit score. Solution? Do not rush into enquiring about your personal loan from different lenders. What you can do instead is use loan aggregator websites where you will find lenders who offers attractive interest rate and processing fees, have favourable tenure and doesn’t charge much on other charges such as prepayment. This way, you can save yourself a lot of trouble of facing the wrath of hard inquiries.
Adding on to debt instead of consolidating: As we have written earlier in the tips, a personal loan should be used to consolidate debt, not to add on more debt. If you already have a pile of debt, then adding more debt to it will further be difficult to repay. It will be seen as irresponsible financial behaviour and will take your credit score even lower.
As we all know, a personal loan can improve or worsen your credit score depending on how you use it. While taking a personal loan, you should ensure you take it from the right lender. One may wonder how to choose the right one. Going for a personal loan that is high on the interest rate and other charges will only burden your debt further. What’s more, you are going to get delayed on your payments which are going to further affect your credit score. It is important you do not just look at the interest rate but the other charges listed under it as well.
