How to Raise Your Credit Score Without Using a Credit Card

 

Raise Your Credit Score Without Credit Cards

Yes, Now You Can Raise Your Credit Score Without Using a Credit Card

I never knew about it until someone from the bank told me about this:

‘If I wanted to raise my CIBIL credit score then there were other ways of doing it without using a credit card.’

In this blog I will talk about one of the best ways using which you can raise your credit score if you don’t want to take the credit card route.

So, if you are looking for an answer to – How to raise my credit score?

Read On…

Credit cards have become an integral part of popular payment options across India. Other than enjoying benefits that credit cards offer, there is one more reason that you may have heard or come across about credit cards – It will help you improve your credit score with CIBIL. This in turn will help you get loans from banks and financial institutions.

But nobody will warn you that you need to make a timely payment every time you use your credit card or else your credit score will be damaged.

If you are interested in establishing your credit worth in the financial market place then what you are going to read might help…

What is a Good Credit Score in India?

As you plan to build your strong credit score it is important to know the scores first.

What is a good score?

What is a poor score?

What should be my benchmark score?

Given below is the range of CIBIL score and what they tell you about credit worthiness:

1. 750 – 900: Excellent

2. 700 – 749: Good

3. 650 – 699: Fair

4. 600 – 649: Doubtful

5. Below 600: Poor. Immediate Action Needed

So, you can see from above that the higher your score the better your chances of having your loans approved.

If the score is below 600 then your credit score is in ICU and you need to take immediate action to revive it.

It is not that you cannot live without a strong credit score. It’s just that you will not be able to take any kind of loans from the banks or any financial institutions.

In today’s world you can earn handsome money to build your house or start a business even without taking a loan.

But for those who don’t want to walk that path, you can focus on improving and maintaining your credit score.

How to Raise Your CIBIL Credit Score without a Credit Card

There are certain points to be considered before you think of availing this facility:

1. You should be financially stable. This means that you should have a regular job or business that brings in regular money.

2. You should not be in a financial mess where you are struggling to make your ends meet every month.

3. You should not be under heavy debt where you may have defaulted on some EMIs.

Now, with these points clear we can get into how to raise your CIBIL credit score without using a credit card.

One effective way to raise your credit score without a credit card is:

Apply for a loan with the best interest rate available in the market.

Let me explain how you can use this to your benefit.

Let’s say you apply for a loan of Rs.50,000/- (Rupees fifty thousand only) and the loan is sanctioned. It is deposited in your bank account. Let’s say that the pay back method you selected is auto debit EMI format from your bank account.

Here’s what you need to do:

Put the loan money in fixed deposit. You are not supposed to use that money immediately.

Basically this is the money that you don’t need. You are using it to build your credit score, remember this.

Every month the EMI will be deducted from your bank account. All you have to do is honor that payment by having enough money in your bank account.

As your EMIs get honored the bank will report your payment history details to CIBIL. Because you have been honoring your EMIs your CIBIL score will start to rise.

There are many ways you can track your CIBIL score and see how it’s developing.

Once you have cleared all your EMIs and closed the loan, your fixed deposit of Rupees fifty thousand is free. You can dissolve the fixed deposit and start using that money if you wish.

Another way is that you can use the loan amount itself to pay the EMI. You will only have to add interest amount to the loan amount.

Don’t try to pre-close the loan. The bank doesn’t earn when you pre-close your loan.

Whatever way you choose, the interest amount you are paying to the bank becomes a sort of fees to the bank to enhance your credit score.

Benefits of Having a Good Credit Score

After we have discussed how you can enhance your CIBIL credit score without even touching a credit card, it will be an added advantage if we also knew what benefits we can derive from a good credit score.

What’s the use of working towards a great credit score if we can gain from it, right?

So, let’s dive into some benefits.

Your credit score is directly linked to your behavior in the market place. It tells how good you are at handling money. So, if you have a good credit score it goes on to show that you have a good credit behavior.

Good Credit Score Benefits

1. It shows that when it comes to money, you are a responsible borrower and you can be trusted to pay the loan amount with interest on time.

2. The credit score is your financial report card. It is a proof that you have borrowed money in the past and have responsibly paid it to the bank.

3. It makes it easier for you to get a big loan. If you have paid a loan of Rupees fifty thousand without defaulting, the banks will be willing to offer you a one lac rupees or more loan amount.

4. With a high credit score you get an upper edge to negotiate a lower interest rate with your bank.

5. You can also negotiate a longer tenure of your loan.

6. It becomes easier to get a loan with a credit score that is well above the danger mark.

A Word of Caution: Even after you make use of any of the above benefits and secure a loan for yourself, make sure that you honor the payment schedule agreed upon by you.  If you don’t, all your hard work to build your credit score will go waste because any sort of default will bring down your credit score.

Building a strong credit score is a lifelong game not a one time deal. You can’t afford to be laid-back or careless about it.

In Conclusion

If you want to improve your credit score then you can follow the method that I outlined above. As I said in the beginning, this was one way suggested to me by someone working at the bank.

Hope you found the information valuable for you to take benefit or gain some valuable insights.

 

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