How to improve credit score to get quicker loan approvals, lower interest rates

Maintaining a good credit score is important to access loans and credit cards on favourable terms. A credit score reflects an individual’s creditworthiness based on his borrowing and repayment history. In India, major credit bureaus, such as CIBIL, Equifax, Experian and CRIF High Mark, provide credit scores. A healthy credit score can lead to quicker loan approvals, lower interest rates and higher credit limits. Regular monitoring also helps detect any errors early.
Most credit bureaus offer one free credit report per year. To access it, visit the official website of the credit bureau. The applicant can provide details like PAN, date of birth, contact information, and ID verification. On submission of this information, the score and full report are typically available instantly, or within 24 hours.

Scanning for inaccuracies

The applicant should check the credit report thoroughly for accuracy. In case a discrepancy is spotted, the applicant should make use of the credit bureau’s online dispute resolution feature. Supporting documents will need to be uploaded to help verify the inaccuracy. The bureau will verify with the lender and update the report, if valid.

Improving credit score

Here are some ways to improve the credit score:

• Pay EMIs and credit card dues on time.
• Keep credit utilisation below 30%.
• Avoid applying for multiple loans simultaneously.
• Retain older credit cards with good repayment history.

Points to note

• Check your credit score at least once a year to catch errors early, especially before taking large loans.
• Maintaining a score above 750 increases the chances of loan approval.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)