How to Build Your Cibil Score If You Are New To Credit Consumer

Credit scores are taken into consideration throughout the acceptance procedure for credit cards and loans. They are also increasingly being utilised to lock in loan rates.

As a result, today, having a good credit score has become a valuable financial advantage. Credit scores, on the other hand, cannot be built without the use of a credit facility. It is not recommended to take out loans in order to establish credit history because this will result in compulsory payment of applicable interest rates. That is why credit cards are the most cost-effective approach to establishing a credit history because they are easy to obtain and don’t involve any compulsory interest until repayment irregularities are done. Let’s deep dive and understand this so that you can receive a high credit score the next time you take up the task of cibil check online.

What is the purpose of credit cards?

In the context of making payments, using a credit card is equal to taking out a loan. When you use your credit card to make a payment, the card issuer is the one who is responsible for making the payment. When you pay your credit card bill, you will receive a refund for the amount paid. Thus, because credit card transactions are considered a credit item, they are reported to the credit bureaus, which then include them in your credit report and use them in the calculation of your credit score. You can see it in credit history when doing cibil check online.

Furthermore, unlike loans, credit card invoices are not subject to interest charges if they are paid in full by the due date. Credit card issuers may charge joining and renewal fees, but the cost of these fees can be mitigated by properly managing your credit card activities in accordance with the interest-free period, reward point systems, cashback and discounts, and annual fee waiver, and other considerations.

Because a large number of credit card issuers provide credit cards to people with no credit history, you should begin your credit journey by applying for a credit card through your current bank. Additional credit card possibilities can be found by visiting online financial portals, which are organised to help you get cards according to their qualifying criteria. Choose the one that best corresponds to your typical transaction pattern.

And if you are unable to obtain a conventional credit card as your credit score is nil which you got to know upon doing cibil check online, consider obtaining a secured credit card to build history.

These cards are provided in exchange for fixed deposits (FDs), and their credit limits are often limited to 90 percent of the value of the FD in question. Because these FDs are lien flagged, you will not be able to close them until you relinquish your credit card. If you fail to pay your credit card payments on time, the issuing bank may be able to liquidate your FDs in order to recover the debt. As a result, banks consider secured credit cards to be a risk-free product, and as a result, they do not evaluate traditional eligibility criteria such as credit score, income, and employment history.

Secured credit cards are comparable to conventional credit cards, with the exception of the fact that they can be used to secure FDs as collateral. Secured credit card transactions are reported to the credit agencies in the same way that ordinary credit card transactions are, and they are used to calculate your credit score. There are a variety of other credit card benefits available with secured credit cards, including an interest-free period, a fuel surcharge waiver, cashback offers, reward points, meal discounts, free movie tickets, EMI conversion, and so forth. Additionally, remember that you can also easily go for an online cibil score check by pan number as well.

Once you have received your credit card, follow these steps to gradually receive a high credit score when you go for cibil check online task after a few months.

Make sure to pay your bills regularly and on time.

Lenders prefer to lend to those who consistently satisfy their credit payback obligations by the due date on their bills. When it comes to determining credit ratings, it is usually assumed that credit bureaus assign the greatest weight to debt payback history as well. In the event of a delay or default in credit card bill repayments, the credit report will reflect this, and credit scores will be cut in proportion. Furthermore, loan and credit card bill repayments remain on your credit record for three to five years or longer, which may negatively impact your loan eligibility for a significant amount of time after the fact. A systematic approach to bill paying, on the other hand, will reflect well on your credit report and will help you to steadily improve your credit score over time, which can be visible when you conduct an online cibil score check by pan number.

Ensure that your credit utilisation ratio does not exceed 30-40 percent

When doing an online cibil score check by pan number and checking your credit report, you will see a crucial factor termed CUR.

This ratio is the proportion of your credit card limit that has been used. Example: If your total credit limit is Rs 80000 and the total number of credit card transactions is Rs 16000, your credit utilisation ratio is 20%. Because lenders prefer to lend to consumers with credit utilisation ratios of up to 30-40 percent, credit bureaus will lower your credit score if your credit use ratio exceeds this threshold. If you often exceed your credit limit, you should contact your card issuer to request an increase in your credit limit or to obtain an extra credit card.

Avoid contacting lenders about direct loan and credit card inquiries.

As soon as a lender receives your credit application, it will begin making credit inquiries through cibil check online, which are referred to as “hard inquiries.” In the event of a hard inquiry, your credit report will be updated, and your credit score will be dropped by a few points. Instead, go to online lending and card marketplaces to examine several credit card and loan possibilities before making a decision. Despite the fact that these markets also seek your credit report from several credit agencies, these requests are called soft inquiries and do not have any impact on your credit score whatsoever. Note that you can also conveniently make it a habit to do an online cibil score check by pan number.

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