How to Maintain a Good CIBIL Score in COVID 19 Lockdown?

CIBIL Score: Maintain a Good Credit Score in COVID 19 Lockdown

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The pandemic COVID 19 and months-long lockdown in India has created havoc and a great impact on the income of millions. The lockdown which was announced by the government of India in March 2020, has led to large numbers of business closures income losses and salary cuts, etc. Even though the lockdown has been eased somehow now, many businesses have still not picked up the pace. As household and business cash flows dry up, there is an increase in demand for new credit, mostly in the form of unsecured loans. Although all banks and other lending institutions have announced a variety of measures, including a loan moratorium and new COVID-19 loan products, your CIBIL SCORE plays an important role in ensuring that you qualify for this or another new form of a loan.

Regardless of the economic situation, you can come up with the need for a loan at any time. When applying for a loan, the first factor to check is your CIBIL score. Good credit can make loan approval easier and also help you lower interest rates.

Maintaining good credit is more important with COVID 19 as lenders have tightened their credit 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 a good credit score, it is important that you know your CIBIL score. There are several factors that can affect your credit score. If you don’t check your score often, you won’t know whether it is increasing or decreasing. When trying to increase your credit score, it is even more important to check your score to see if your actions were worthwhile.

Customers who have taken out HomeFirst home loans can now check their credit score directly from the ‘Free Credit Score’ section on the website. This is a great way to monitor your creditworthiness and the factors that affect your score. We also offer recommended actions that can help you improve your CIBIL Score.

Keep Paying Your EMIs on Time:

Paying your EMI on time is the single most important factor that can help you maintain good credit. Once a loan is availed, paying EMI is your commitment. Likewise, if you use a credit card, it is your responsibility to pay 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 moratorium that was 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. This can at least save you from a fall in credit score if you fail to pay EMI.

However, opting for a moratorium could also 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 loans 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 the interest expense is reduced in the future. Guaranteed loans such as home loans or car loans have a lower interest rate than personal loans or credit cards, which have a higher interest rate.

Avoid New Loans Unless You Need it:

You may have noticed that the higher the number of credit accounts, the lower your credit score. An increase in the number of credit accounts can affect your current creditworthiness by creating a credit inquiry for your PAN.

There may be financial needs during a pandemic, but avoid applying for a new loan, especially if you recently got 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 installments on a credit card.

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.

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