Credit score, a 3-digit number between 300 and 900, is vital not just for approval of different types of lines of credit, but also to avail attractive rates of interest on loans. Financial institutions always check credit report online as well as the credit score of an individual before approving a loan. You must, therefore, maintain a high CIBIL score, which should ideally be 750 plus. you can also check credit score online in just few minutes. Few tips that can help maintain this score are listed below.
Timely EMI payment: Borrowers should pay their EMIs on existing personal loans or others in time. Missing on the due date of payment can attract penalty charges along with depreciation in the credit score.
Maintain FOIR: A borrower must maintain an ideal FOIR (Fixed Obligation to Income Ratio) within 30-40%. In case the FOIR goes up, it affects the CIBIL score negatively as the individual carries a risk of default on fixed obligations.
Maintain old credit cards: Old credit cards maintained with regular bill repayment should be kept functional. They help in maintaining and even improving the CIBIL score.
Single application: It is advisable to send one loan application at a time instead of sending multiple applications. It helps in maintaining the credit score since it limits credit report enquiries. Multiple lenders checking the report can also negatively affect the score.
Borrowers should follow all the guidelines above and maintain their credit score for better chances at mixed lines of credit in the future.