Credit history plays an important role at the time of getting any loan or credit cards. Every lender checks your credit history before approval of any cards or loans. Most of the lender hesitate to lend money to those who have a bad credit history. Good credit history depicts that you are the trustworthy borrower and have a good past loan track. On the other hand, bad credit history depicts you are a risky borrower and may not repay the loan. That is why banks and NBFCs hesitate to provide a loan to the one who had a bad credit history. You should check your CIBIL score regularly. It will give you an idea regarding your credit status. You can monitor your CIBIL score by applying on the websites of online aggregators or you can visit your nearest branch and ask for a CIBIL report. Another most important reason for a regular checking credit score is to check whether there is any error or false record about your credit account.
Some tips to generate credit history
Use credit card regularly
You should use your credit card regularly and pay the bills or dues on time. You can build a healthy credit history by using a credit card but make sure all the dues must be paid on time. It is advisable you should use a credit card once in a month in the shopping store, restaurants etc.
Take small consumer loan
Another way of creating credit history is, to take some consumer loan and pay the EMIs regularly. After paying 6 EMIs you CIBIL history may generate and can get the loan or credit card easily.
Avoid over limit credit utilization
You should always avoid excess utilization of credit limit. Make sure you should not use entire credit limit. It is advisable not to spend over 50% of your credit card limit until your CIBIL score reaches to 750.
Pay your due on time
You have to pay all your dues on time because late payment lowers your credit score which badly affects your CIBIL score, even if your dues are a few days late. You can do one thing if any case you are not able to pay any your dues in any month, you can ask your lender to help you in restructuring the debt to make it easier to pay.
Avoid multiple loan enquiry
If you have applied for a loan or a credit card and your application is rejected, the information will be recorded in your credit report. If you go and apply to another bank immediately then they will result in a low score and the previous rejection and may reject your application. The best thing you can do in such cases is to not apply again and wait for the score to improve.
Never settle any loan or credit card
Many people opt settlement of loan if they are not able to repay the loan. Settlement of a loan amount is when the borrower asks for a deal that will allow them to close the debt for an amount that is lower than the actual amount due. Loan settlement badly affects your credit score. No lender lends you money after the settlement of loan because settlement depicts the borrower will not be able to repay the loan in near future.
So, these are the tips which help in increasing or generating your credit history.