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Loan Rejected by A Financial Institution? Steps To Get Your Credit Score on Track

Loan Rejected by A Financial Institution? Steps To Get Your Credit Score on Track

Have you faced a loan rejection? Your credit score might have dipped. However, you can get it back on track within months. Read on.

Perk your CIBIL score up in a matter of months with disciplined repayment behaviour. Here are 6 things you can do to maintain a healthy credit score.

Regularly clear your dues

Always pay your credit card bills and loan Equated Monthly Instalments (EMIs) on time. That’s because missing even a single EMI or bill payment can negatively impact your score. Having a spot-free history of timely repayments is the easiest way to maintain a healthy credit total. Ultimately, a credit report free of late payments and EMI defaults increases your CIBIL score.

Consistently review your credit report

Make it a habit to check your credit score and CIBIL report online to review any discrepancies. It will also help you gauge your potential loan eligibility. Besides, by regularly checking your credit report, you can keep track of the changes and rectify errors, if any, on time. Any incorrect detail, including errors in personal information, incorrect loan amount, or other mistakes in financial information, can impact your report negatively.

Additional Read: What is a Good Credit Score? Benefits of Having a Good Credit Score

Maintain a mix of credit

Your credit score and credit report should indicate a healthy and balanced mix of unsecured and secured credit. Here, unsecured credit means collateral-free loans like personal loans, and secured credit includes home loans, auto loans, etc.

Now, the lesser unsecured credit you have active, the better will be your CIBIL score. That’s because it will show your lender enough credit history while establishing you as a reliable borrower. However, remember not to take unnecessary loans or credit cards only for maintaining a credit mix.

Lower your credit spending

The credit utilisation ratio is the percentage of the total available credit card limit on a monthly basis. Here, ideally, your credit utilisation should be around 30%-35% or lower than your current credit limit. If you regularly spend more than the limit, it will show a higher dependency on credit, which is perceived as risky by lending institutions. However, not using your card entirely will also dampen your CIBIL score.

Don’t apply for unnecessary credit

Having multiple applications active in your name in a short span can lower your credit score. That’s because every application for new credit creates a hard enquiry in your CIBIL report, bringing down your score. Thus, limit these enquiries and apply for credit only when required.

Keep your old accounts open

Your credit total depicts your past credit activities. So, closing old credit accounts can lower the average age of your credit history. You should, instead, have a long credit history with a spotless record of timely repayments to boost your credit score.

Additional Read: How Do Loans Affect Your Credit Score?

Over to you

Follow these tips to maintain your credit score, and you can have smooth sailing with your loan applications. If you’re looking to get a loan to tend to a financial need, download the Moneyfy app today. Get a range of customised loan products at competitive loan terms.

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