Credit score is a three digit summary of your credit history. Credit score is a number in the range of 300 to 900. If you have good repayment history, then you can expect your credit score to be high. If not, then it would be low. Most banks check credit score when you apply for a loan. Lenders might reject your loan application if your credit score is low.
It totally depends on you. The easiest way of improving your credit score is by availing secured credit cards and repaying regularly. The credit score is not going to improve in a matter of a few days. It would certainly take a few months, if not more. Both improving and hampering credit score are in your hands. If you have handled debt wisely, then you wouldn’t have been in this situation of having a bad credit score. If you have a bad credit score, then you have no one to blame but yourself. Individuals with bad credit scores are not granted unsecured loans. They must furnish a security or collateral in order to get loans.
You need to understand that there are many reasons apart from defaulting that cause your credit score to go down.
See Also: 6 Reasons Why You Should Check Your Credit Score
If you have recently done something that hampers credit score then, you would have to wait for some time to understand the impact.
The table below shows the average time to recover from a jolt on credit score due to various reasons:
Action |
Average Recovery Time |
Credit Score Impact |
Applying for Credit |
3 months |
Minor |
Closing an Account |
3 months |
Minor |
Maxing Out a Credit Card |
3 months |
Moderate |
Missed Payment / Default |
18 months |
Significant |
Bankruptcy |
6+ years |
Significant |
All banks are mandated by RBI to share credit information on a monthly basis with all four RBI authorized credit bureaus. Hence, your credit score is updated each month.
Following are few of the steps that help improve credit score in 12 months:
See Also: How To Check Credit Score?
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