How to Improve Credit Score after Default? | Credit Help India

How to Improve Credit Score after Default?

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How to Improve Credit Score after Default?

Thursday, September 29, 2022

A good CIBIL score plays a major role in determining how fast you can get the financing and the interest rate of the same. Before providing a loan, the lenders in India check the CIBIL score of the person to understand the repayment history and see if he is genuine enough to make the payments on time. Thus, when planning to make a big purchase, you must look at your credit report to analyze the score and see if you are eligible for the same. But if you have defaulted on a loan in the past, and it has resulted in a low CIBIL score, then you must know there are certain things you can do to get back that good CIBIL score. It would be helpful if you avoid looking for how can I improve CIBIL after default and read the guide ahead to get a better understanding.

1.Regular repayments

Making timely payment of the due amount is extremely important. It is seen as a financially responsible behaviour that can have a positive impact on the lender who will check your CIBIL score to provide you the financing.

2.Timely pay the outstanding credit

When you search for how to improve the CIBIL score after default, you will find the strategy everywhere. Correct management is quite essential for a person to understand and adopt. The individual must make the payment of the dues on time. Remember, an increase in the balance on the credit card can result in a lower CIBIL score.

3.Maintain the credit utilization ratio

It is essential that the person maintains a credit utilization ratio between 25% and 30%. When the ratio goes up, it indicates that the person is spending most of the income making the payment of the debt, which will reduce the credit score.

4.Keep an eye on the credit report

You must keep a check on your credit report. After all, this will ensure there is no issue in the credit report. You must be able to check the credit report every 6 months to rectify any issues so everything is clear in the lender's mind. As there are some errors that can reduce the CIBIL score, you must take measures to maintain the report.

5.Never indicate risk

The credit model is designed to identify the early signs and risks in the borrower's profile. For instance, non-payment of credit cards or revolving credit as a first-time borrower or the credit profile of the borrower. Besides, they can be other changes like cash advances which can show a negative CIBIL score. It would be helpful to keep an eye on your spending and credit usage to avoid such risk factors.

6.Avoid applying for multiple credit lines

An online search for how I can improve my CIBIL score after default will help you understand the risks of multiple credit lines. Getting a new credit line will increase your credit limit. However, this also puts each account for a hard inquiry on the credit report. This means a hard inquiry will be concerning. The credit profile will show how much risk is there to offer you the financing. When you have got multiple hard inquiries in a short period, then it can have a negative impact on your CIBIL score. Besides, it can also lead to financing rejections.

7.Be patient

You must understand that the CIBIL score gets better over time. It is a long process. So it will require time to improve. It would be helpful if you stay patient and keep on monitoring your credit report and the spending pattern credit lines and ensure timely payments to have a good CIBIL score over time. This will help increase the score and will also assure you have better creditworthiness.

Conclusion

When you look online for how to improve CIBIL score after default, you will find many strategies that can provide you with the ease to boost the credit score but remember the process is long. So you need to stay consistent. Timely payment and managing credit are extremely important to see a positive change. Make sure that you are aware of your credit score and that you keep an eye on it to avoid any complicated situations and ensure your creditworthiness is high.


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