Your CIBIL score is not defined by any single factor, it fluctuates on the basis of multiple reasons triggered by your credit activities. For instance, applying for a loan can reduce it by 5-10 points, whereas, paying all the EMIs or credit money back on time will increase it. So, we have the perfect answer to your question- How to Improve CIBIL Score? Now let’s explore the guaranteed ways to improve your CIBIL score.
What is CIBIL Score?
A credit score obtained from TransUnion CIBIL Limited, a popular credit bureau, is known as CIBIL Score. It is a 3-digit number ranging from 300 to 900, representing a person’s creditworthiness. The more your credit score is close to 900 the more lucrative credit offers you will get from a lender, that too on low-interest rates.
How Much CIBIL Score is Enough?
Although you should maintain your CIBIL score as close to 900 as you can, the ideal range number is 750 or above. Major lenders consider a CIBIl of 750 an ideal one. Below this, they refuse to grant a loan or credit card. But few lenders allow it on the basis of your income and circumstances if your credit score is higher than 650.
Benefits of a High CIBIL Score
Here are the Major Benefits of a High CIBIL Score:
- Your chances of loan and credit approvals increase
- You will get low-interest rate offers when you apply for a loan.
- Increase in Pre-approved loan offers.
- A higher CIBIL score opens the door to premium credit cards
- Easy access to higher loan amounts and credit card limits.
- You will get easy approvals for longer-tenure loans.
How to Improve CIBIL Score?
Here are the 10 Solid Ways to Improve Your CIBIL Score:
1. Repay on Time
Whether other factors make a difference or not, repaying the loan amounts or credit card bills on time will help you greatly to improve your CIBIL score. Timely repayments will make you a creditworthy borrower increasing your credit score with a high margin. So, when you ask how to improve your CIBIL score, then the best answer is to repay the credit amounts on time.
2. Check for Errors in CIBIL Report
Sometimes a CIBIL report may record an entry or loan information for which you have never applied or miscalculated EMIs. So, in this case, if you find any discrepancy in your CIBIL report, then you will have to raise a dispute with TransUnion CIBIL Limited, to correct it.
3. Have a Healthy Credit Mix
Having a healthy credit mix is important. So, if you have a BNPL account and a small consumer loan then you also must have a credit card. For example, a person with a high number of secured loans is always a valuable customer for lenders. However, if you have more unsecured loans then must pay all the bills on time.
4. Clean all Credit Cards
Always have a clean credit card record in terms of repayments. Don’t make partial payments unless your financial situation doesn’t allow a full-bill repayment.
5. Don’t Become a Joint Account Holder
If you become a joint account holder for a loan or credit card or even a guarantor, then you are also liable if your partner doesn’t pay bills on time. Your CIBIL score will also go down with your partner.
6. Getting a Secured Card
A secured credit card means a card against a fixed deposit scheme. If you apply for a secured card with major lenders like Axis Bank, ICICI Bank, SBI Bank, etc then your CIBIL score may hike up very fast.
7. Don’t Apply for Multiple Credit Options
If you need a credit card or loan from the bank, then you must think before applying. Submitting multiple loan or credit card applications in a short period of time will decrease your CIBIL score by a great margin. This major happens when your credit or loan application gets rejected by a lender. When the application is rejected people apply with another lender, then another and then another. This creates a large number of hard enquiries in your credit report and that is highly negative for you.
Also read:
5 Different Ways to Hurt Your CIBIL Score and How to Avoid Them
8. Track Credit Utilization Ratio
According to many experts, you should spend more than 30 per cent of your credit limit. Whether you have a BNPL account, credit card, or any other financial product from a lender, you must not spend more than 30 per cent of the total credit limit allowed to you. If the circumstances are not financially favourable then you must allow yourself to only spend 50 per cent of the total credit limit. It’s because increased credit utilisation shows that you are highly dependent on credit money from lenders.
9. Increase Credit Limit
If your lender says we are increasing your credit limit then don’t say no. The key to improving your CIBIL score is not having a small credit limit and using it fully, instead, you should have a high credit limit and low utilisation ratio.
10. Choose Long Tenures
While applying for a loan you should choose a longer tenure to repay the amount. It not only reduces your EMI amounts but also gives you more time to improve your CIBIL.
