Loans are approved by banks and financial institutions to persons who have a good history of repaying the money they have taken as a loan. The history that proves these people to be responsible borrowers is contained in a monthly report that is sent to the banks and the financial institutions by a government agency called the Credit Information Bureau (India) Limited. This bureau was set up in 2000 by the Government of India to help banks avoid giving loans that may not be repaid.
The chances of getting a loan from a bank become brighter when you can improve CIBIL score that you have received from the government agency. Almost all the premier banks and financial institutions in the country are members of this organization and can easily find out your loan repayment history from the report sent by the organization. Your attempt at trying to improve your credit score can be a plus point when your credit history is analyzed by the bank giving the loan.
Getting Increased Ratings
Loans taken with the help of credit cards can be disastrous if the EMI is not paid in time. The failure to pay even a single EMI on time can cause your credit ratings to come tumbling down to reach a very low level. A credit card should be used as sparingly as possible so that the amount to be repaid every month is never too large to be unaffordable. Only when all such payments are clear can you expect an increase cibil score and banks ready to give you any further loans.
Paying on Time
To avoid defaulting on payments, you should opt for ECS, which ensures that the EMI is paid without fail every month. The arrangement can take the load of remembering the installments of the various loans that have to be paid at different points of time in the month. The ECS method of payment can help to improve CIBIL score to a large extent as the EMIs are automatically paid through your bank to the Bank from which you have taken the credit loan. Multiple loans can be handled safely in this way.
Avoiding Loan Rejection
Sometimes loans become an integral part of your expenses which cannot be avoided. An application for a house loan can get rejected if your credit rating is dismal showing some defaults in payment. To avoid such a situation from occurring you have to increase CIBIL score by paying on time and never defaulting on your monthly EMI payments. Even if you have failed to pay in time once or twice, being a non-defaulter for long periods can prove that you are a responsible person, and the defaults in payments are only aberrations.