Credit cards are slowly becoming one of the predominant modes of payment globally. With credit cards, you no longer have to carry your stack of cash everywhere you go. Apart from the convenience of cashless transactions, credit cards also offer you rewards and cashback. This is a great way to earn some money back while you spend.
Today, with different categories of credit cards available to individuals, they have become extremely popular. However, with every credit card that is issued by a financial institution or a bank, there is a huge amount of risk involved. Therefore, lenders want to carefully check an applicant’s credit profile before approving their credit card application.
One of the main eligibility criteria for getting a credit card is your credit score. This is a score that is assigned to you on the basis of your history as a borrower. It summarizes your repayment patterns, number of debts, and credit utilization ratio among other aspects. The higher your credit score, the better are your chances of acquiring a loan or a card.
TransUnion CIBIL is a credit bureau that is usually contacted by lenders to know about your credit score, or CIBIL score. If you want to apply for a credit card, having a good CIBIL score is a must. If you currently have a poor credit score, here are 6 ways in which you can boost your CIBIL score.
- Repay your debts and EMIs on time
One of the primary factors that determine your credit card CIBIL score is your repayment history. This includes everything — credit card dues, EMIs on products, and installments on loans. If you repay your debts on time and don’t show up as a defaulter, your credit score will automatically increase. This will also help you present yourself as a responsible borrower, and would increase your chances of being eligible for future loans and credit cards.
- Have a low credit utilization ratio
Your credit utilization ratio is the percentage of your available credit that you actually end up using. What is a credit limit? Simply put, it is the maximum amount of money that you can borrow or spend using your credit card. A high credit utilization ratio implies that you are in severe need of credit in order to fulfill your financial obligations. This would significantly hamper your credit profile, and the credit bureau’s scoring algorithm will lessen your score. If you want to keep improving your credit score, make sure to use only 30% of your available credit.
- Have only a few debts
If there are a large number of unpaid debts against your name, your credit score will automatically be below. This is to indicate that you’re already overburdened by your existing debts, and can’t handle a new one. Therefore, paying off some of your existing debts, and having few debts against your name will help.
- Do not close older credit cards
Contrary to popular belief, having more than one credit card will not hurt your chances of getting a new one. In fact, the more well-maintained credit cards you have, the better your credit score will be. Furthermore, more credit cards will also give you more available credit limits. Thus, your credit utilization ratio will be even lower.
- Correct mistakes on your CIBIL report
A lot of the time, credit reports turn out to be faulty, as they show an already paid-off debt as an outstanding amount. Such mistakes can seriously hurt your CIBIL score and chances of getting a new credit card. Therefore, you must always check your CIBIL report for such errors, and rectify them as soon as possible.
- Do not apply for a new credit card soon after rejection
Credit card application rejection can bring disappointment and frustration. However, you should never apply for a new credit card soon after a rejection. This is because when lenders inquire about your credit score, it is considered as a “hard pull”. This hard pull temporarily lowers your credit score until you improve it by repaying your dues or EMIs on time. Therefore, consecutive hard pulls can significantly hamper your credit score. You should at least wait for a few months before applying for a second time.
It is now understood that even if you have a bad credit score, you don’t have to worry about not being eligible for a credit card. Timely repayments, fewer debts, and judicious utilization of credit can help you amp up your CIBIL score. By following these methods, you can improve your CIBIL score, and apply for a new credit card.
If you’re looking for a multifaceted 4-in-1 credit card, the Bajaj Finserv RBL Bank SuperCard is just what you need. The card offers rewards with every purchase, and these points can be redeemed for vouchers, coupons, and more. You can also avail of a personal loan against your credit limit by using this card.