When you need financial support, you run to a bank to get a loan, but the problem starts when even the bank rejects your application and leaves you helpless because of your low credit score. At such times, finding a poor credit loan may seem challenging, and you might feel that you should have known the right way to improve your credit score. Can credit score, which is also known as CIBIL score, be improved? The answer is yes, and you can enhance your credit score by taking several steps. This article will help understand what a CIBIL score is and how to improve your CIBIL score with various types of credits. Let’s get started!
What is a credit score?
Based on information gathered from the credit bureaus, CIBIL score/credit score is a numerical value carried out by deep analysis of a person’s credit files, including his credit history and credit report. This numeric value is considered while lending a loan to a person to confirm security on a person’s creditworthiness. However, there are different types of credits too, and they are borrowed and repaid with other methods. These are basically of three types as mentioned below :
- Installment credit – In such credits, you get access to the amount all at once, but you repay it in installments over a fixed period.
- Revolving credit – You can borrow and pay back the amount in a line in these types of credits. You have to make the payment monthly to save yourself from interest.
- Open credit – In open credits, the monthly payment amount can fluctuate depending upon the expenses. You have to pay it over a certain period within a month, whether the amount is less or more.
Ways to improve credit score
· Credit utilization –
Making frequent and small payments throughout the whole month makes your graph go in favor of credit utilization. Keep your credit utilization low, and don’t let it compile.
- Payment history –
Never forget to pay your bills on time because a record of late payment can stay on your credit report for a very long time (as long as 7-8 years). The good thing is that the effect of missed or late payments disappears with time, plus by doing activities in favor of the credit after getting the credit score hurt, you can get it back on track.
- Credit limit –
Try to increase your credit limit and lower your utilization. When your credit limit increases and the balance remains the same, the utilization rate automatically decreases. You can talk to the issuer; an increment in your income may also help grow the credit limit.
- Rectify your errors –
Sometimes, your reports can be mistaken, and wrong information can be taught through them, which makes a harmful impact. Thus, it is essential to correct the mistakes marked on your reports, such as any on-time payment denoted late in the news, any information too old to be shown, or any other negative report that is not true and mistakenly displayed in the report.
- Don’t close the credit card –
When you close the credit card and your utilization rate is calculated, it indicates that you lost the card limit, and thus it is closed. This can take down your credit score, and therefore you should never complete your credit card. You can use it occasionally to prevent it from closing.
- Use credit mix –
To improve your credit score, mix up different credit amounts such as revolving credit, installment credit, and available credit. While applying for a loan, timely repayment of these loans would make the lenders sure about your repayment capacities.
What to do in need of an emergency loan with bad credit?
If you don’t have a good credit score, or enough time to boost it, and you need an urgent loan, you always have an option of mini cash loans with no credit check. As clear from the name itself, you don’t need to get your credit score checked in these loans. Even if you can’t go with mini loans and your needs are high, you have many types of loans that do not demand a good CIBIL score or, for that matter, any credit record,such as
– Payday loans for instant cash. These loans do not check credit scores, but they come with high-interest rates.
– Home equity loans in which your house acts as the collateral, similar to the home loans.
– You can even take out a credit card cash advance by simply visiting your nearby bank ATM.
– Credit unions provide cash with minimal documentation without having anything to do with your credit score.
Final words Although you have seen so many ways to get no credit check loans, you cannot deny that getting these loans increases the chances for you to get stuck in the middle of a debt cycle. If you opt for a loan despite having bad credit, it does not harm the bank but you. So it is better to maintain a good credit score and use the bad credit loan options only when in urgent need.