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6 Assured Ways to Improve Your CIBIL Score

CIBIL score is considered as the primary determinant in the process of loan and credit card approval. TransUnion CIBIL Limited (Formerly known as Credit Information Bureau (India) Limited) is one of the four leading credit bureaus in India that collects and maintains consumer information related to loans and credit cards, as provided by the banks and NBFCs on a monthly basis. CIBIL score is the most important component of your Credit Information Report (CIR) that depicts your creditworthiness.

CIBIL is a 3-digit numeric that ranges from 300-900, wherein any score above 750 shows responsible credit behavior of an individual. Whereas, poor or no credit score would simply imply that lenders consider an individual to be on high credit risk that may eventually result in credit application rejection. To avoid loan or credit card rejection, firstly, you need to Check CIBIL score and download CIBIL report regularly. Secondly, you may follow the below mentioned measures to improve your CIBIL score gradually.

6 Best Ways to Improve your CIBIL score

1) Paying your all Credit Card Dues and Loan EMIs on time

Regular and timely repayment of credit dues helps to boost your CIBIL score. Any missed or delayed payment needs to be avoided, if not urgent. Paying your loan EMIs and credit card dues on time shows your responsible credit behaviour to lenders that eventually benefits you while applying for new credit. Low interest rates and option to choose longer repayment tenure are the two most important benefits of maintaining a good CIBIL score.

2) Monitor your CIBIL report for any fraudulent activity or errors

Keeping a regular check on your credit report to rectify minor or major errors can lead to the rise in your credit score. Try resolving any error in your credit report at the earliest by raising a CIBIL dispute via Consumer Dispute Resolution process online. The credit report errors may include typo errors, incorrect personal or account information, duplicate credit accounts, mismatch in balance or overdue amount, incorrect Days Past Due (DPD) or collateral details, errors in paid-off accounts, etc.

3) Lower down your Credit Utilization

Do not rely fully on the sanctioned credit limit and try not to exceed your Credit Utilization Ratio (CUR) above 30% on regular basis that too without making the credit card payment in full. Low Credit Utilization Ratio helps to increase your CIBIL score gradually and makes it easier to apply for loans or credit cards in future. For example, your monthly total credit limit is Rs. 1,00,000 and your expenses for a month are Rs. 40,000, signifies that your credit utilization ratio is 40%. If you payback the entire Rs.40000 due amount before the due date then you will not have any negative impact on your credit score, but if you accumulate the due amount by paying only minimum due, then the overdue amount will keep piling up over the months, thus increasing your CUR and impacting your credit score negatively. Thus, even if you are using your credit card to maximum limit, make sure you make the full payment on time to keep your CUR under check.

4) Avoid Applying for Multiple credit products at one time

Too many credit inquiries in short duration in your CIBIL report by financial institutions shows your credit hungry behavior. Multiple credit inquiries make you look more dependent on credit nd make you look like a high-risk customer for financial institutions. These situations may arise via applying for multiple credit products simultaneously or in short duration, such as credit cards, personal loan, home loan, auto loan, etc. So, avoid making too many credit applications simultaneously or in a short duration of time.

5) Maintain healthy Credit Mix

Maintaining a healthy mix of credit is always beneficial in credit cardor loan application approval. For example, secured loans like home loans improve CIBIL score, as they build long-term appreciating assets, whereas availing multiple unsecured loans impact negatively on your CIBIL score. Secured loans are backed by collateral/security thus making it less risky for the bank in loan approvals, as compared to unsecured loans wherein there is no collateral to be submitted with any financial institution.

6) Avoid closing your old credit cards to build credit history

If you are availing old credit cards then it is recommended to maintain them as long as you can repay the card dues on time. Do not close down your old credit cards. This would eventually help you to build a strong and lengthy credit history over a period. Further, it shall also help you to maintain a good credit score.

By now, you must have had a fair idea of the importance of building and maintaining credit history and the reasons for building and maintaining a good CIBIL score. Therefore, try following these measures to increase your credit score and enjoy all the benefits while availing a loan or credit card.

Check and download your CIBIL score for free with no impact on credit score and get monthly updates, just in a few minutes.

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