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Sleepless over low CIBIL score? Here’s how to Rebuild it

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cibil scoreUnexpected circumstances in life such as bankruptcy, job loss, divorce or a prolonged illness can derail your financial well-being. It is a vicious cycle – financial crunch could lead to payment defaults, which could take a toll on your credit score. Poor credit score dashes your hopes of future credit from prospective lenders. In such cases, rebuilding your credit history can be one of the toughest as well as important things to manage.

Karthik Jayaram from New Delhi held two credit cards from ICICI Bank, one from Barclaycard and one from HSBC. Losses in his business led him to a tight financial situation, which in turn, led to his inability to pay any of his dues towards his credit card companies on time. Mounting interest to the principal added to his woes as this meant a derailment of his credit score.

After his business picked up steam, his first priority was to settle his credit card bills. Rebuilding his credit score was very important since that would help him earn a good credit standing in the future. Karthik repaid the entire outstanding amount and received ‘No Due’ letters from the credit card companies. In an effort to reconstruct his score and credit history, his next step was to apply for a secured credit card against his fixed deposit with the bank. He has been using it regularly since the last one year and has been paying the dues on time.

In today’s time, the need for credit is very imperative. If you have defaulted on your payments for any reason, your credit information report will promptly report it. With a bad credit report, you are unlikely to get any loan or credit card from any bank. However, that does not mean you are scarred for life.

Rebuilding your CIBIL score is a slow process.  Follow these simple steps to help clean up your battered credit history.

Step 1 : Pay off existing debts. The most effective way to improve your credit score in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your score.

Step 2: Opt for a secured credit card, which is usually given against the security of your fixed deposits, like Karthik did. ICICI Bank, DCB Bank and Axis Bank are three banks that issue secured credit cards in India.

Step 3: Go for a personal loan using an asset as collateral. Paying dues towards this loan on time for the next 12-24 months will help revive your credit history.

Step 4: Don’t make too many inquiries for more credit cards and loans. Also, abstain from taking huge loans until your score has improved and you are financially healthy.

Credit Experts at CreditVidya with 50+ years of experience in retail banking and credit bureau industry will provide you with personalized recommendations, an action plan and will closely work with you to help you rectify old mistakes so that your loan application never gets rejected in the future. To find out more, visit: http://www.creditvidya.com/InvestmentYogi/Start.aspx

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