How Credit Card Users Can Build a Strong CIBIL Score

Credit cards have made our lives simpler and more convenient in a variety of ways, including the provision of rewards in the form of cashbacks and discounts on future purchases, as well as support in the management of unexpected monetary challenges. It is essential for individuals who use credit cards to demonstrate responsible behaviour in order to construct or enhance their credit score through the consistent and methodical utilisation of credit cards. This is because the number of credit card users and transactions has usually been rising year after year. 

So here are super tips for credit card users to have a strong credit score that falls on the higher side of cibil score range.

Always be prompt in the timely payment of your debt obligations.

Lenders will almost always give preference to extending credit to borrowers who demonstrate a disciplined approach to the repayment of their debts by making on-time and complete payments of their credit card bills. When determining a person’s credit score, it is commonly assumed that credit agencies place the utmost importance on a history of responsible debt repayment. Your credit report will record any type of late payment or default on your credit card account, and this will result in a reduction in both your credit score and your credit report. 

As a result, your eligibility for loans may be negatively affected for a significant length of time and especially put you in a dilemma if you don’t know what is cibil. You should make sure that you adopt a regular and disciplined repayment plan for both your credit card bills and the repayment of any loans you may have taken out. This is because acts such as these reflect favourably on your credit report and progressively grow and enhance your credit score.

Keep old credit cards with you.

Users of credit cards whose credit score is on the lower side of cibil score range frequently make the mistake of cancelling their old credit card accounts with the expectation that their credit score will improve. It is instead in your best interest to hold on to such older credit cards because they help to push the average age of your credit history further back in time. This is because the duration of your credit history is one of the most important factors that go into determining what is cibil score of yours. Keep in mind that lenders will typically give preference to borrowers who have an older average age of credit accounts when making loans. The average age of your credit accounts will decrease when you close older credit cards, which could have a negative effect on your credit score. When you close one of your credit cards, the remaining available credit on all of your cards will be reduced. This might cause an increase in your credit utilisation ratio, which can again have a negative impact on your credit score, which you can witness when you check what is cibil score through online tools. If you have many credit cards and find that you need to close some of them, you should think about cancelling the ones that are relatively younger rather than the ones that are much older.

Stay away from direct applications and queries to lenders.

If you apply for a loan or credit card directly with a financial institution, that lender will obtain a copy of your credit report from the relevant credit bureau in order to determine whether or not you are creditworthy and check your cibil score range. Your credit score will drop by a few points as a result of each of these requests, which the credit agencies will deem to be a “hard inquiry” and will include in your credit report. Therefore, you should try to avoid making several direct inquiries to lenders regarding loans or credit cards, particularly within a short period of time. Instead, you should think about going to online financial marketplaces to compare different lenders and select the most appropriate one according to your financial needs and eligibility because the inquiries that are initiated by them are considered to be soft enquiries, which do not have an impact on your credit score which you can yourself check if you know what is cibil score and report.

Get habituated to checking the status of your credit report at frequent intervals.

Make it a habit to check your credit score and report on a regular basis whether or not you use credit cards or have taken out any kind of loan. This is important for maintaining good credit. Since your credit report is a summary of your credit history, which is the basis upon which your credit score is calculated, it is of the utmost importance to check it regularly in order to prevent any fraud or error, whether on the lender’s part of the credit bureau’s part, from getting bypassed and hurting your credit score and reducing your chances of being approved for credit in the future. 

So, understanding what is cibil and then reviewing your credit report on a regular basis will help ensure that any fraudulent activity or errors are caught in a timely manner and that you are able to get them fixed before they cause any further harm. Keep in mind that every person is entitled to a free credit report once a year from each of the 4 bureaus that compile credit scores. 

Keep your percentage of used credit between 30 and 40 percent at all times.

The percentage of your overall credit card limit that you have actually used is referred to as your credit utilisation ratio. If your credit utilisation ratio is higher than 30-40 percent, lenders typically consider this to be a symptom of credit hungriness and pull down your credit score to the lower side of the cibil score range. As a result, credit bureaus may cut your credit score if it is higher than this level. Users of credit cards need to make it a priority to keep their credit utilisation ratio between 30 and 40 percent in order to prevent their credit score from being negatively affected. If you consistently go above this threshold, you should either ask the lender that issued you your credit card to raise your credit limit or else get another credit card in order to bring down this percentage.