What to do if your credit score is below 650?
Having a credit score less than 650 is not great. Most lenders will think twice about giving you a loan and will likely reject your request. However do not panic, there are many simple things you can do to build your credit score up very quickly so no lender can turn you away, here are our top 5 suggestions.
- Stop Borrowing money for things that aren't necessities
Cibil keeps track of every bit of credit you take. If you keep borrowing money very frequently it will be tracked and indicate to the lender that you are someone that probably cannot live within your income, making you a risky lender as you will not be able to save enough of your income to pay their loan back.
- Pay off your existing Debts and DON'T miss EMI payments.
The next best way to boost your credit score is by making it a point to promptly pay off all existing debts! Being behind on your existing loan paymentstoo much debt that is not clearing fast enough gives , lenders the impression that might think you have taken on too much debt and another loan will only make the situation worse for you. Paying EMIs on time is not enough to boost your credit score but failing to pay them on time will cause a decrease in your credit score.
Tip: Also your total EMIs should not be any higher than 30% of your total income. The longer you stick to this golden rule the faster your credit score will increase.
- Have a healthy mix of credit.
Opt for a mix of credit (secured (ex. Gold Loans) and unsecured credit) (ex. credit card). This indicates to lenders that you are willing to repay a loan regardless of whether there is some collateral involved or not. Examine different assets you possess that can be collateralized. Click here to understand the different types of credit.
- Monitor Your Credit score report regularly
Sometimes there might be mistakes in your credit report. This can have a very detrimental effect on your credit score. An example of such a mistake is if your home loan lender has forgotten to update CIBIL of your latest loan repayments. If errors such as this are identified you must notify CIBILcibil of them immediately through their consumer dispute resolution portal. There are many tools available to check your credit report. Click here to access our partner, Bajaj Finserv’s free credit report generator.
- Alternative sources of credit that can help build your credit score
If you are generally not eligible for an unsecured loan from a formal provider there is no need to worry. There are now many different ways you can avail of a secured loan without a credit score, using assets that you have such as gold or property, or joining a joint liability microfinance group.
If you have an LIC policy for example, Mera Kal will help allow you to avail credit without any CIBIL score check through our of loan partners. at BajajFinserv. If you want to check your eligibility to the Mera Kal Loan against LIC policy click here.
- Set a Credit Limit
For example, someone may set a 1 lakh credit limit for themselves, but demonstrates their sensible choices and restraint by using only 20 to 30% of it. This shows that even though you have a higher limit at your disposal, you can use it sensibly.
How can Mera Kal Improve your Credit score
A strong credit score opens doors to financial opportunities, allowing you to access loans, manage unexpected expenses, and even secure better insurance rates. While building your credit score takes time and dedication, Mera Kal offers a unique path to accelerate the process with responsible borrowing.
Remember, every timely repayment on your Mera Kal loan contributes positively to your CIBIL score. This consistent track record demonstrates your creditworthiness, increasing your attractiveness to lenders and unlocking a brighter financial future.
Think beyond the immediate benefit of the loan. By making your repayments a priority, you invest in your credit health, paving the way for smoother access to credit and better financial terms down the line.
Start your journey today. A Mera Kal loan, coupled with responsible repayment habits, can be the key to unlocking your financial potential and achieving your goals. Remember, it's not just about getting a loan; it's about building a solid financial foundation for the future.
Don't wait. Check your eligibility for a Mera Kal loan and empower yourself with the financial freedom you deserve.