What if your credit score is bad?

Late payments or defaults are the prime cause for bad credit scores. Image source: Reuters

'Disclaimer: This story is for informational purposes only and should not be taken as investment advice'

A good CIBIL score enhences your creditworthiness. But, if your score is bad it will reduce your chance to get a loan.

According to bankbazar.com, if your credit score is lower than expected, you should follow certain steps to improve it:

Identify what has spoilt your credit score i.e late payments on credit cards, loans, etc. Late payments or defaults are the prime cause for bad credit scores, as these show that the borrower is not very responsible with repayments or doesn’t have the required servicing capacity.

Make sure that you never default on any payments in future and make all your credit cards and/or loan EMI payments on time.

If the score is bad because you have too many personal loans or credit cards then close some cards. Work towards bringing your score up and re-apply for a loan only once you have reached the desired range.

If you have loans nearing the end of their tenures, make regular payments till their closure and avoid applying for another loan soon after. Otherwise, it will indicate poor financial capacity for liquidity and cast doubts on your financial position.

Maintain a proper credit utilisation ratio i.e. don’t use too much or too little of the credit available to you.

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