How to Improve Your CIBIL Score?
Your CIBIL rating depends on your CIBIL report, which sums up your record of loan repayment. While a score that is no less than 750 assists you with getting credit based on good conditions, you can undoubtedly cure a score that is not great.
This score is presented by certain associations in the country. These incorporate CIBIL (Credit Information Bureau India Limited), A CIBIL score that is well known surrendered the association's bind with different monetary organizations and other web-based stages.
That’s why many times the credit score is linked with the CIBIL score.
A credit report contains details of your personal information, contact information, employment history, credit limits on various credit cards, credit balances, and the dates you opened various accounts.
This report is accessed by various lending organizations and government entities if you are looking for loans.
Credit scores take into account your past behavior in relation to your credit report, not just your current actions. But here are some tips that you can follow for better credit as an individual.
CIBIL Score Range...
CIBIL Score Range
Steps to improve your CIBIL Score
If your CIBIL score is low, you may have been in default for almost a year. The reasons for a bad score can be any of the following.
- Delay in payment of loan/EMI or card dues
- Excessive credit limit usage
- Revolving credit on credit card
- Making too many credit inquiries without approval
You can follow some steps which will help you in improving your CIBIL score. Want to know those steps? Take a look below.
Ways to increase CIBIL score:
Don’t miss a payment:
Check your payment history up to date. Default in payment, even if it is an actual default, adversely affects your CIBIL score. You can use tools like auto-debit, standing instructions, or NEFT mandate to ensure timely monthly EMI payments.
In the case of check payment, ensure that you have paid the check before the due date to allow time for the clearance period.
Check your CIBIL credit report regularly:
Make sure to check your CIBIL score at regular intervals to ensure that the report is showing accurate information. If you find any errors, you can get them corrected immediately so that they do not have any ill effect on your CIBIL score.
Limit your credit usage:
One of the best ways to increase your credit score is to stop using your credit card to the maximum limit. Limit your monthly credit card bill to 30% to 50% of your limit.
For example, if you have a credit limit of Rs 1 Lakh per month. Make sure your bill does not exceed Rs 50,000 per month. Using more than 50% of your card limit increases your credit utilization ratio which in turn brings down your credit score. Plus maxing out your credit card means you’ll have trouble managing the budget and paying your credit card bill in full and on time. That’s why your marks get reduced.
Close long-running loans that are giving you bad credit.
Having multiple liabilities on your credit report adversely affects your credit score. You can choose to close short, and long-term loans that are significantly impacting your credit report. Closing the pending loan balance or credit card balance reduces your overall debt, which has a positive impact on your credit score.
Avoid multiple loan/credit card applications in a short span of time:
If you have too many credit inquiries in a short period of time, it is not a good sign for your credit score. Imagine you have applied for a credit card, personal loan, and home loan within a few months; What does this look like to a lender? This indicates that you are loan hungry and applying for different types of loans.
Pay attention to the spending habits of your joint applicant:
If you do not keep track of the spending habits of your joint applicant, you can bear the brunt of no fault of yours. In such a situation, if you are making a joint loan application from someone else who has defaulted on the payment, you will also lose your CIBIL or credit score as indicated in your report. The only way to prevent this is to ensure that all cardholders make timely loan and card payments and restrict themselves from applying for joint credit terms.
Request for an increase in your credit card credit limit:
Check your CIBIL report thoroughly You can contact your credit card company and request an increase in your credit limit. Increasing your credit limit will enable you to better manage your credit-to-debt ratio without affecting your credit score.
You can view your credit report online and see if there are any discrepancies in terms of your name, date of birth, e-mail ID, and PAN number. Also, report any discrepancies in your loan or card account to the bureau. It can increase your score if it has gone down because of a discrepancy.
Benefits of having a good CIBIL score
You can take care of your repayment habits and improve your CIBIL score as there are many benefits along with a good CIBIL score. Apart from the low-interest rates, there are many other benefits that you can enjoy with a good CIBIL score.
A good CIBIL score makes the loan application process hassle-free and quick as banks consider the applicant more creditworthy.
However, if your CIBIL score is low, it does not mean that you will not be approved for the loan as you can always build your CIBIL score before choosing any type of loan, but you should always keep this in mind.
However, no matter how bad your score is, you can increase your CIBIL score. The lower your score, the longer it will take to generate your CIBIL score. Apart from the benefits that come with a high CIBIL score, in some places, it is necessary that your loan application is also approved.
These are some habits that you can weave into your life to improve your credit score over time. However, it is essential to note that these steps will not immediately change your score. After implementing them, it will take around 6 months to a year for your credit score to improve.