A credit score is certainly a reflection of your financial habits. The CIBIL score is one of the first factors that every bank or lending institution checks before offering any type of credit to an applicant. It is very essential for youngsters to maintain a good credit score, however it can be challenging. As many youngsters begin to enter the workforce, improving the CIBIL score should also happen simultaneously. The CIBIL score range extends up to 900. Typically, it is recommended to have a CIBIL score above 750. This would provide several benefits for your finances.
Advantages of a Good Credit Score
Having a good credit score can have several benefits. Here are some of the key advantages of having a credit score above 750.
- Easy Credit
By maintaining good credit, banks and lending institutions offer credit in a hassle-free process. This is mainly because a good credit score translates to good credit repayment patterns and fewer financial obligations.
- Lower Interest Rates
Banks and financial institutions offer a lesser rate of interest to individuals who have a good CIBIL score. On the other hand, having a poor credit score can lead to a higher interest rate on the granted credit.
- Faster Approval of Loans
As a good CIBIL score directly reflects the creditworthiness of an individual, the loan approval process takes lesser time. People with high credit scores can hence avail of a loan within a shorter span of time with lesser hassle.
- Higher Approval Limit
A good credit score has the potential to help you avail of a higher credit limit.
5 Steps to Boost Credit Score
Boosting your CIBIL score can be done by following a few steps. Let us have a look at the 5 steps that can help you boost your CIBIL score.
- Get a Loan
Availing of a loan can be your first step to improving your credit score. Once you avail of the loan, ensure to repay your EMIs on time. This would help you improve your credit score drastically.
- Get a Low-Limit Credit Card
A low-limit credit card would help you spend at a limited rate. Meanwhile, as you begin to spend using your credit card, ensure to repay your credit card bills on time. This would improve your credit score and help your financial future with many benefits like cash backs and rewards.
- Spend Less
It is the rule of thumb to not opt for multiple credit cards. Moreover, ensure to spend less on the credit card that you already have. It is best to not have a very high utilization on your credit limit. Always plan your finances accordingly so that you keep your credit card utilization under 30%.
Maintaining a good credit score can translate to your credit repayment habits. It helps you avail of credit in an easy manner in the long run. Moreover, it is always best to start early when it comes to building a good credit score. Moreover, check CIBIL score regularly to understand your credit habits. You can check your CIBIL score through Finserv MARKETS.