-Team TML

How to improve your credit score for loan approval in four simple steps

28-Sep-2022

Your credit score is one of the most important determinants of your financial health. A high credit score will get you loans at lower interest rates from banks, while a low credit score will lead to you paying more for loans. Improving your credit score may not be easy, but it is worth the effort.

The first step is to regularly check your credit or CIBIL report for any errors or incorrect information. Sometimes loans that you have not even taken can show up on your credit report and drag down your score. So it is important to check your report regularly and get any errors corrected.

The second step is to pay all outstanding bills on time. This will show banks that you are a responsible borrower and are capable of repaying your debts on time. Make sure to pay all your credit card bills and other loan payments on time to improve your credit score.

The third step is to keep your credit utilization below 30% of your available credit limit. If you have multiple cards, try not to use more than 30% of the total limit on all cards put together. This will demonstrate to banks that you are not over-leveraged and can handle additional borrowing.

The fourth and final step is to plan your borrowings carefully. Don’t overspend beyond your means and make sure you can afford to repay any new loans you take on. Falling behind on payments will only hurt your credit score further, so it is best to avoid such situations altogether.

Follow these four steps and you will see an improvement in your credit score over time. It may not happen overnight, but with patience and planning, you can definitely achieve a high credit score.

 

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