How to improve CIBIL score, How to improve my CIBIL score
A CIBIL score or credit score is a report of your credit history. A credit history is an evaluation made on your credit card spending, your loan, and EMI repayments. Credit history is provided in the Credit Information Reports (CIR). CIBIL takes charge to collect and manage the repayment records for loans and credit cards, for both individuals as well as commercial entities. These records are collected each month from various registered member banks and financial institutions. Based on this data, CIBIL issues a CIR and a credit score. The CIBIL score, in turn, allows lenders to evaluate and potentially approve loans.
Also Read: 6 Important Factors That Affect CIBIL Score and Everything Else You Need to Know
Before learning how to improve CIBIL score, one must understand why it is important to maintain it. Many Indians don’t deem it necessary as opposed to the USA or UK where a bad credit score can deny you housing, job opportunities and other such necessities. However, as the economy becomes more globalised, there are benefits to having a good credit score in India as well. Here are some pointers:
Your loans and credit applications are more likely to be approved by the lenders. A good credit score means that you will not default them with late payments or EMIs.
As a borrower, you will hold more power to negotiate lower interest rates. Paying lower interest on your loans will help to save more.
Good credit scores will help you leverage better loan terms. You may receive higher limits on your credit card or higher loan amounts.
All in all, a person with a good credit score is seen as a reliable borrower. Banks and lenders feel more confident in giving loans to them making their financial credibility high.
So, you’ve checked your CIBIL score and it seems to be not ideal? Anything ranging from 300-649 is seen as an unfavourable credit score. Maybe your credit score history shows to be “NA/NH” (Not Available/No History” which means that you have no credit history to display. These scores can be worrisome if you are looking forward to taking a loan.
If you are left asking “how to improve my credit score?”, we have quite a few tips that will help you do just that:
The first step is to check your credit score at the official CIBIL website. Once done, figure out why your credit score is so low. Are you repaying your loan on time? Have you made too many credit inquiries? Is your credit score wrongly evaluated? Knowing where you stand and how to improve CIBIL score with that information will prove handy.
Revolving credit is a type of automatic credit that automatically renews when the debt is paid off. Common examples of revolving credit include credit cards, home equity lines of credit (HELOCs), and personal and business lines of credit. The revolving credit utilization ratio is defined as the percentage of a borrower's total available revolving credit that is being used. It plays an important factor in impacting your credit score. If you have too many late payments, higher credit limit usage or have applied for many credit cards, it can harm your credit. Thus, make sure to clear your dues or increase credit limit to lower your credit utilization percentage.
This can prove to be the quickest way on how to improve your CIBIL score. Many consultants are currently helping people fix bad credit scores. They may cost anywhere between ₹3000 and above. However, credit repair consultants will be able to negotiate on your behalf on the administrative front and save a lot of effort.
This is an absolute must. Whether it is credit card bills or too many unsecured loans, make sure to clear all your due payments. Late payments damage CIBIL scores incredibly. Continue the good behavior of doing timely repayments to escape a low CIBIL score.
Credit can easily make or break the question of how to improve your CIBIL score. Aim to not use your credit limit of more than 30% of the total amount. If your limit goes more than 30% constantly, consider increasing your limit. At Snapmint, you can enquire for almost a 1.5x higher limit.
There are two types of inquiries: soft inquiries and hard inquiries. Soft inquiries are when you can check your credit. When an employer or business partner looks through your credit report, this is called a soft inquiry and does not affect your CIBIL score. However, hard inquiries are when you take a credit card or a bank loan. Done once in a while, they will not reflect badly. However, if there are multiple hard inquiries within a short period, it can affect your CIBIL score as it shows that you need financial assistance.
A thin credit file refers to a credit record with less than five credit accounts. There are several ways to thicken your credit file. Apply for a secured debit card carefully. Do not apply too many at once as it can lead to hard inquiries. Also, make sure you maintain all the credits so it does not lead to a late payment issue.
Did you know that deleting old accounts can further harm your CIBIL score? But what about the ones who reflect negatively on your current credit? Well, it can still negatively affect the CIBIL score. To escape that, let your old accounts reflect on your score. Do pay up all of them to clear the dues.
If you have an old payment that you did not make, and it is reflected in the CIBIL score, make sure to clear them up. This will 1) reflect positively as you have closed it and 2) improve your CIBIL score too.
It may take 45 days for your credit progress to get updated as it typically takes that much time to calculate the data. So, if your credit score is not improving in 2-3 days, make sure to check it within 2 months. Also, keep a track of your score whenever you can to check for suspicious activity.
Maintaining different types of credit helps one build a good credit score. It helps lenders understand that the borrower is capable of keeping a check on their credit. Make sure to do your repayments on time.
Do you have loads of debt and it's tanking your CIBIL score? Try taking a personal loan to pay all the debt off. Then, work your way to diligently pay back the personal loan. This helps to organise your loan and helps to repay the many old debts that you have.
EMI shopping is another way to build a CIBIL score. How? EMI loan repayments help to build your credit history. Timely repayments do affect your CIBIL score positively. This is seen as the quickest way on how to improve your CIBIL score. To learn more, click here (blog 3 article).
Banks, creditors, insurance companies, employers, and government agencies can view your credit score and it can thus determine your lifestyle choices. Make sure to keep yours on track!
CIBIL scores can be increased by shopping on EMIs, clearing repayments, and keeping your repayments on time.
When one maintains a good credit history through clever credit utilization, timely repayments, and keeping delinquencies in check, they can gradually improve their score from 750 to 800.
CIBIL score update within 45 days. Keep checking it to ensure your credit activity is reflected.
No, the CIBIL score is maintained by Credit Information Bureau (India) Limited which is a government entity and cannot be influenced.
One can move closer to a 900 CIBIL score by making sure they exhibit good credit behaviour. However, any score above 750 is considered ideal.
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