CIBIL Score: Maintain a Good Credit Score in COVID 19 Lockdown
The COVID 19 pandemic and India’s month-long blockade have created chaos and a huge impact on the incomes of millions. The closings, announced by the Indian government in March 2020, have resulted in numerous business closings, lost revenue, cut wages, and more. Although the blocking has been reduced in some ways, many companies have not yet accelerated. As household and business cash flows dry up, the demand for new credit increases, especially in the form of unsecured loans. Although all banks and other lending institutions have announced various measures, including a loan moratorium and a new COVID-19 loan product, your CIBIL SCORE plays an important role in ensuring that you qualify for this or any other new form of a loan.
Regardless of the economic situation, you can give up the need for a loan at any time. When applying for a loan, the first factor you need to check is your CIBIL score. Good credit can make loans easier to approve and can also help you lower interest rates.
Maintaining good credit is more important in COVID 19 as lenders tighten their lending policies. Let’s take a look at how to maintain a good credit rating during COVID 19.
Check Your Credit Regularly:
If you want to maintain good credit, knowing your CIBIL score is important. There are several factors that can affect your credit score. If you don’t check your score often, you won’t know if it is going up or down. What’s more important when trying to improve your credit score is to check your score to see if your actions have helped.
Customers who have taken out a HomeFirst loan can now check their credit rating directly from the Free Credit section of the website. This is a great way to monitor your creditworthiness and the factors affecting your performance. We also offer recommended actions to help you improve your CIBIL score.
Keep Paying Your EMIs on Time:
Paying EMI on time is the single most important factor that can help you maintain good credit. After the loan is used, paying EMI is your obligation. If you use a credit card, you are also responsible for paying for the remaining balance.
Your financial situation may have worsened due to the pandemic. If you can’t pay EMI or credit card rates, you can take advantage of the moratoriums approved by the Reserve Bank of India. The good thing about the moratorium is that it doesn’t affect your credit score.
However, you should know that using the moratorium will increase the interest rate on your loan.
If Required, Opt-in for Moratorium:
If you can’t pay EMI and other obligations, opting for a moratorium can be a good solution. At the very least, if you fail to pay the EMI, it can save you from a credit decline.
However, opting for a moratorium could have other unintended consequences. For 3/6 months there are no payment details that can affect your chances of getting a loan in the future. Also, your chances of getting new credit during the moratorium can be tough. So it is best to consider the moratorium after weighing all the pros and cons.
In addition, when choosing a moratorium, it is a good idea to apply for a moratorium on loans with lower interest rates so that interest costs are reduced in the future. Guaranteed loans such as home loans or car loans have a lower interest rate than personal loans or credit cards with higher interest rates.
Avoid New Loans Unless You Need it:
You may have noticed that the higher the number of credit accounts, the lower your credit score. Increasing the number of credit accounts can affect your current credit score by making a credit request for your PAN.
Financial needs may exist during a pandemic. However, avoid applying for a new loan, especially if you have just received a loan. Carefully review the reasons for the application before completing the application.
Avoid applying for a loan only to pay off a previous EMI loan or credit card payment.
Check out for errors on your Credit Report:
Your credit report is prepared by credit reporting agencies from data shared by your creditors. As a result, your credit report may contain errors that could affect your creditworthiness. Errors can be errors in your personal information such as name, PAN, etc., or associated with your credit account. This error can also occur due to fraudulent activity.
As a result, you should check your credit history and credit report frequently (at least every 2-3 months) to see if everything is okay. If you see an error, please report it to the credit bureau immediately.
