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Improving Your Credit Score May Save Money On Auto...

05 March 2015, 12:00 PM

Over 80% consumers take loans for purchasing cars in India. Credit score is one of the important documents that help you get car loan approval on low interest rates. It’s a three digit number that signifies your credit-worthiness to the banks, lenders and insurance companies. The score based on credit report information provided by credit bureaus such as CIBIL (Credit Information Bureau India Limited) in India. Creditors with a credit score over 750 are charged with lowest interest rates, while a credit score of 500 might get you highest interest rates. Serious black marks like foreclosure or bankruptcy, on credit report, further increase your score in very short duration. Although, you can boost your credit score and pay less interest on auto finance and credit cards.

How to improve your credit score?

Review your credit report

Review your credit report generated by Indian credit bureau. If you find any mistake or error clear-up immediately. Errors like late payments or collection, incorrect credit limits are common in credit reports. You can get your reports for free from credit bureau once a year. Creditors aren’t penalized for reviewing their own credit report or score.

Always pay your bills on time

Overdue payment and irresponsive behaviors have negative impact on your credit score. If you forget to make payment on time, consider automatic withdrawal settings from your bank account. Make plans or organize your finance to pay your bills.

Pay down your credit card balances

By minimizing your debt, you can improve your credit score. If you don’t have enough funds to pay, take loan from a friend or family member. It’s one of the most effective ways to boost your credit score, quickly.

Don’t cancel unused credit cards accounts

If you cancel or close your unused credit card accounts, it might lower your score. Experts suggest using old credit cards, occasionally, so that the issuer will keep sending your information to the credit bureau. A long credit history also increases your score on report.

Never max out your credit limit

Don’t ever exceed your credit card limit. It’s better to maintain two cards with balances below 30% of limit, whether you pay each month. 

Do your loan shopping quickly

Credit score increases when you apply for a loan. Several credit inquiries might reduce your score, but the bureau won’t consider credit inquires made within a short time span or frequently.

Use a secured credit card

A secured card with a low credit score or no credit history will help you create reports information for the bureau. A card with responsible use for a minimum six months is considered a secured one.  

Use shopping or other cards

You can build a good credit history by paying small monthly charges through shopping or other cards rather than using regular credit cards. This will also help you to make complete payment on time, and boost your credit score easily.

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