Say you are planning to buy an apartment or a car and will have to take a loan for that. You did a CIBIL score check as your bank suggested and found that your CIBIL score is below 750 which is considered a bad CIBIL score.
A bad credit score may mean an inability to get loans. Even if lenders agree to give loans they will charge a high-interest rate. This high-interest rate gets translated to higher EMIs and the longer repayment period.
In this post, we will look into how we can improve our credit score.
But before that, learn what is a credit score-
POSSIBLE REASONS FOR A BAD CREDIT SCORE
1. Inaccurate Information in the CIR
CIR stands for Credit Information Report which contains details of your credit history and track records of availing and repaying credit. It is least to say that an accurate and updated CIR is fundamental to a good credit score.
2. Missed payments
Some of the missed payments may be caused by genuine financial hardship but also can be a result of operational issues such as non-receipt of statements or dispute over fees on credit cards. Also one can miss payments due to international relocation.
SO, HOW TO IMPROVE THE CREDIT SCORE?
1. Know your Credit Rating and Credit History
You cannot improve what you do not know. Get hold of the CIR and understand what contributed to your bad Credit History. Look for inaccurate information and information which requires to be updated.
You may find that some loan accounts which are supposed to be closed after you paid back the loan are still open. You may also notice loan accounts which do not belong to you.
There can be discrepancies with the account statement. A “settled” or “written off” status affects your credit rating negatively.
Also, check for discrepancies in the payment dates and due dates.
2. Raise dispute in case of inaccurate information
Credit Rating agencies have systems to raise disputes with them. In case the CIR is not updated with the latest information, get the latest statements from past lenders and submit them to the Credit Agency.
3. Handling past defaults
Whatever the cause be for past defaults, it is a better idea to pay past dues and settle with the lender.
CIBIL Dispute Resolution