Want 800+ Cibil score to get low-interest rate loan? Follow these 6 time-tested tips from expert

When you are applying for a loan or a credit card, there are chances that you are in a desperate need of credit. But in that desperation, don't apply randomly. Each time you apply for a credit facility, the lender initiates a check on your credit history. The check is known as a hard check. It pulls your score down marginally.

More than that, the lender thinks that the applicant is credit-hungry. It is a red flag. So, apply thoughtfully and one place at a time. If the lender rejects your application, know its reason, rectify the mistake, and then reapply. Less rejections, the better the credit score.

The utilisation ratio is the percentage of credit you use from your credit limit. E.g., if you have a credit limit of Rs 1 lakh on your credit card and you utilise Rs 20,000 from it, your utilisation ratio is 20 per cent.

Though high utilisation, when done with full and timely payment, has limited bearing on your credit score, a higher utilisation ratio can pose a negative impact on your score. Experts suggest a good utilisation ratio to be under 30 per cent.

One serious mistake that many credit card holders make is to pay just the minimum amount due (MAD). While paying the minimum due can save you from penalties, it doesn’t save you from the high interest costs of unsecured debt.

Most cards will charge you an annualised rate of 30-50 per cent on your dues. So, don't settle for paying just the minimum due unless you are going through a financial crisis. Repay your dues in full and on time.

Sometimes, if you are unable to pay your monthly credit card bills, your bank might offer you a one-time settlement. Now the thing is: should you take the offer?
A credit card settlement may help you pay off your Rs 1 lakh bill with just Rs 40,000, but it will wreck your credit score.

So, avoid settlements and repay your credit card bill in full. Even if you’ve opted to settle, approach your lender to repay the dues in full and collect a no-dues certificate. It would also help turn your loan status from 'settled’ to ‘closed’.

Your score can go up and down for various reasons. But you should know reasons for this movement. This can only happen if you track your score regularly. Once a month is enough. These self-checks, also called 'soft’ checks, do not harm your score.

Sometimes your score could fall through no fault of your own. Recently, while checking their credit reports, some people were shocked to see unauthorised loan accounts in their names.

Some of those loans had been defaulted on. The victims’ credit scores were ruined through no fault of their own. They escalated these matters via the lender and got the fraudulent loans off their records.

The age of your credit line has a minor impact on your credit score. The older the credit line, the better for your credit score. Cancelling an old card may remove the positive impact on your credit score. In may lower it slightly.

The reasons for cancelling a credit card can be many. But if it has to do with annual fees or not finding its features useful, you can ask your bank to move you to another card. It will save you from cancelling your card.