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Apr 17
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How to build your Creditworthiness

How to build your Creditworthiness

While it’s true that Rome wasn’t built in a day, you must remember that the city was demolished in a single day during the reign of Nero. This historical analogy is very true when it comes to building your creditworthiness. It takes time to build it up, and there are no instant remedies to wipe off past mistakes from your credit history in a jiffy.

CIBIL score is based on your credit history and can be improved only over a period. Don’t fall prey to misleading ads that claim to improve your credit score instantly. These allegations at best are false, and the worst is illegal. They do more harm than good.

It pays to remember that accurate negative information cannot be removed without a trace from your credit history. On the other hand, you can overcome its impacts by following a few best practices consistently over time. The results of a bad credit history are significant. From downright rejection of loans to high-interest personal loans for poor credit, the consequences are many.

Don’t despair that you have a poor credit history. Over time, as your credits get better, you can build your creditworthiness. Here are some of the ways to boost your creditworthiness and improve your CIBIL score, so that you can land better deals in the financial market.

Dos:

  • Always make sure that you pay your credit card as well as utility bills well before the due date. Missed payments significantly affect your credit score in a negative way.
  • In the unfortunate case of missed payments, try to come abreast of all your payments as soon as possible. Try to pay the EMIs of loans you have availed like online home loans or low rate personal loans on time.
  • In the case of debts, try to finish it off rather than shifting it to other accounts.
  • Try to re-establish your credit history if you had problems in the past. You can get new credit cards and pay the bills promptly on time. This will help to improve your creditworthiness in the long run.
  • Always apply for new credit cards only when there is a need. Do not take up cards just because your bank offers them.
  • This doesn’t mean that you have to shun credit cards altogether. Rather properly maintained credit cards and repaying your loan EMIs on time can help you positively.
  • Try to keep balances low on your credit cards.
  • If you’re genuinely having problems in making ends meet, then it’s time to seek the help of a professional credit counsellor.

Don’ts

  • Remember that building your creditworthiness takes time and do not fall prey to short-term strategies that promise to boost your credit score miraculously.
  • Do not close unused credit cards on the assumption that it’ll help to improve your score.
  • Also, do not open a huge number of credit cards or avail several loans like home loans, personal loan, car loans all at the same time. This could seriously impact your score.

You can’t reverse your credit scores overnight. However, by following these best practices over time, you can see a significant improvement in your scores and your creditworthiness increases gradually over a period.

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