How to Improve CIBIL Score?

Improving your CIBIL score is essential for obtaining better loan terms, interest rates, and credit facilities. Here are some pointers to elevate your score:

• Timely Payments - Ensure all your EMIs, credit card bills, and loan repayments are made on time. Delays or defaults negatively affect the score.
• Limit Unsecured Loans - Avoid taking too many unsecured loans like personal loans or credit card debt. Lenders prefer a mix of secured (like home loans) and unsecured loans.
• Monitor Credit Utilization - Keep your credit card utilization below 30% of the credit limit. High utilization indicates dependency on credit and can pull down your score.
• Avoid Multiple Credit Enquiries - Every time you apply for a loan or credit card, a hard inquiry is made on your credit report. Multiple inquiries in a short span can lower your score as it portrays credit hunger.
• Check Credit Reports - Regularly check your credit report for any discrepancies or mistakes. If you find any, report it immediately to the concerned credit bureau for correction.
• Maintain Old Credit Accounts - Longer credit histories with a consistent repayment record can enhance your score. Avoid closing your oldest credit cards, even if you don't use them.
• Limit Opening New Credit Lines - Opening many new accounts in a short time period can be seen as risky behavior, especially if you don't have a long credit history.
• Negotiate with Creditors - If you have missed payments, communicate with your creditors, ask them to not report the skipped payments to the bureau or restructure your debt.
• Maintain a Healthy Mix - Have a mix of credit, including both installment (like loans) and revolving credit (like credit cards). This displays your ability to manage different types of credit.
• Avoid Guarantor Defaults - If you are a guarantor to someone's loan, ensure they are repaying it timely. If they default, it will impact your score as well.

By following these guidelines and being diligent with your financial decisions, you can effectively improve and maintain a robust CIBIL score.

Also Read : Experian Credit Score

Also Read : TransUnion CIBIL Score

Your credit score comprises a three-digit number, CIBIL Score Range from 300 to 900. It depends on your credit files and history and past payments made by you. 

Before we move on to how to increase CIBIL score immediately, let’s find out what a decent credit score is that will make you a capable borrower of loans.

If you have a credit score of 750 - 900, you can easily take out loans from banks without any hassle. For a credit score of 700 to 749, chances are you will be examined well before you get a loan.

Make sure you understand the ideal balance for the principal amount you intend to take out as a loan before moving to how to improve CIBIL score.

Additional Reading: What is CIBIL dispute?

There are several reasons that can affect your credit score, which eventually determines whether or not you will be approved to take out a loan. Knowing the reasons that influence your CIBIL score is as important as figuring out how to increase CIBIL score fast. 

Here is a list of all the potential reasons that eventually decrease your credit score.

Making late payments

If you have the habit of making frequent late payments, your credit score will always be on the lower side. Even a single late payment can affect your CIBIL score a lot.

Late payments not only indicate you are incapable of planning your finances properly but also make you an incapable borrower of loans.

The best way to get rid of such risks of late payments is by opting for a debt consolidation plan.

Taking out multiple loans

Before you move on to figure out how to improve CIBIL score, make sure you are aware of taking out multiple loans from multiple lenders. It may cause late payments and affect your CIBIL score eventually.

It will show that you are financially not capable enough to make your monthly payments on time. It can significantly impact your CIBIL score. When you take out multiple loans and fail to make your payments on time, your lenders may send inquiry requests to credit rating agencies. It affects your credit score a lot. It will eventually decrease your CIBIL score.

High utilisation of CIBIL limit

The credit limit you have refers to the maximum amount you can spend through your credit card. Credit limits are set based on your capacity of making repayments. If you're wondering how to increase my CIBIL score, make sure you keep track of how much you spend from your credit limit. 

If you constantly spend more than 50% of your credit limit, it will affect your credit score immensely. Ensure that your expenses remain within 50% to avoid a decreased CIBIL score.

Additional Reading: How to calculate credit score?

Additional Reading: Equifax Credit Score

Once your credit score drops, it will take a lot of time to improve your credit score from scratch.

It can be really difficult at times, but it is not impossible. Keeping a constant track of your credit history can help you rebuild your credit score sooner than you think.

A minimum credit score of 750 is considered to be a decent CIBIL score to apply for loans.

If you have less than 700 or 650 CIBIL scores, make sure you focus on improving your scores.

It can take anything between four months to 12 months for you to become eligible to apply for loans. The duration depends on your current CIBIL score and your credit history for which you should check free credit score. If you have a CIBIL score of less than 650, it can take you more than eight months to recover from that stage.

Additional Reading: CRIF credit score?