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How to Improve CIBIL Score - Smart Tips

Published On Feb/26/2023

CIBIL score is the evidence of the credit history of individuals. Several lending institutions evaluate your CIBIL score to verify your creditworthiness. Therefore, you must maintain the score, as it often determines whether you are eligible for a loan. But how to increase CIBIL score?

The CIBIL score ranges from 300 to 900, and the higher your score, the more lenders will be ready to offer you a loan. A CIBIL score of 700 and beyond is ideal for a personal loan, and anything below that can be a matter of concern. Keep scrolling to learn about some smart tricks for CIBIL improvement

  • Pay EMIs on Time

    You might think that paying your EMIs shows that you are financially responsible. However, paying EMIs isn’t enough as long as you are not paying them on time. Late EMI payments are reported in your CIBIL report and reduce your score.

    The best way to ensure timely EMI payments is to set up automatic transfers from your bank. But you also need to ensure that your account has enough funds to transfer. It will aid with increasing your CIBIL score and save you from incurring bounce charges.

  • Reduce Credit Utilisation

    Your credit cards might have a high limit but try not to exceed 30% of the total limit. Going above 30% negatively affects your credit score. At the same time, not using your credit card can also hamper your credit score.

    You should also remember to pay the outstanding dues on your credit card on time. Apart from improving your credit score, paying credit card dues on time keeps mounting interest rates at bay. Furthermore, remember not to apply for too many loans to maintain a high credit score.

  • Borrow Different Types of Credit

    When you obtain credit wisely, it can be conducive. A person who has never applied for any credit often has a low CIBIL score. In that case, a person might find it difficult to obtain loans.

    It is always recommended to add different types of credit to a portfolio. It should be a balanced mix of secured and personal loans. The CIBIL score increase process also requires you to apply for long- and short-term goals.

  • Check Joint, Co-Signed, and Guaranteed Accounts Regularly

    You are equally accountable for missed payments in joint, co-signed, and guaranteed accounts. The negligence of the joint account holder or the guaranteed individual will pull down your credit score and might make you ineligible for loans when needed. Therefore, avoid becoming a guarantor of loans or a joint account holder.

  • Look for Error in Your Credit Report

    Several people find discrepancies in their credit reports. For instance, a person’s credit score may be low because their lender hasn’t notified CIBIL about the latest payment details. Therefore, regularly check your credit report and look for mistakes.

    Several online marketplaces now offer a simple process to help you monitor your credit history. You can visit their official website to access and thoroughly check your CIBIL report. Apart from looking for errors in the existing information, you also need to check whether there are delays in updating crucial details in your report.

Ending Note

The CIBIL score increase process takes time, and you must maintain patience. Remember that the CIBIL score won’t increase overnight, and you must be persistent with your approach.

FAQs:

  1. Can late EMI payments affect credit score?
  2. Late EMI payments negatively impact borrowers’ impressions and lower their credit scores.

  3. Can having multiple credit cards increase the chance of loan approval?
  4. Credit cards can be beneficial when you are applying for loans. However, owning too many credit cards and making high-value purchases can hurt loan approval.

  5. Is it possible to increase the CIBIL score in a week?
  6. One should never forget that improving the CIBIL score is a gradual process. Smart tips like paying EMIs on time will help individuals increase their CIBIL score with time.

  7. What is a good CIBIL score?
  8. Usually, a CIBIL score above 700 is considered good.

  9. How long does it take to improve CIBIL score?
  10. Improving CIBIL can take six months to one year or even longer.

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