Worried over your Low CIBIL™ Score? Tips to Improve your CIBIL Quickly

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Your CIBIL™ score is a complete summary of your credit history. Banks, NBFCs, credit card companies and other lenders use your CIBIL™ score to determine your loan eligibility. Having a high CIBIL™ score in the range of 750+ helps you secure the best deals on credit cards and loans. A high CIBIL™ score makes it easy to qualify for larger loans/credit card limits at the best interest rates. 

A low CIBIL™ score, on the other hand, not only makes it difficult to qualify for loans and credit cards but also charges you a higher interest rate, increasing your overall debt burden. It takes time to build an excellent CIBIL™ score, but your CIBIL™ score can deteriorate quickly if you don’t manage it properly. 

In this guide, we share ten smart tips to maintain a healthy CIBIL™ score and avoid loan/credit card rejections:

Smart Credit Tip #1

Pay your credit dues on time. 

Missed a loan EMI? Have a delayed credit card payment? It’s time to get your credit sorted. Start by repaying any delayed credit payments. Payment history is the most significant factor impacting your CIBIL™ score, and getting your credit payments on track is a must to improve your credit score. 

Payment delays not only cause you to pay more in the form of late fees, penalties, interests but also lower your CIBIL™ score. So, make sure to settle all your credit card bills and loan EMIs on time. You can also automate your credit card bills and loan EMIs to avoid missing out on deadlines every month. 

Smart Credit Tip #2

Too much credit lowers your credit score. 

Handle credit prudently and avoid taking too many loans/credit cards at a time. When you have too many loans at a time, it increases your risk of default, which in turn crashes your credit score. 

Always try to keep the number of ongoing loans to a maximum of 1 or 2 at a time. To avoid lowering your CIBIL™ score, make it a point to repay one loan before taking another. Also, note that repaying a loan on time gives your CIBIL™ score a boost. So, if you are working to improve your CIBIL™ score, taking a small loan and repaying it on time is beneficial. 

Smart Credit Tip #3

Have a mix of credits.

Having different types of credits like secured loans (home loans, car loans, two-wheeler loans, loans against property) and unsecured loans (personal loans, credit cards) is an excellent way to boost your CIBIL™ score. Different loan types of short and long tenures demonstrate your ability to handle various credits responsibly, helping you build an excellent CIBIL™ score in the long run. 

Smart Credit Tip #4

Apply for new credit only when you need it. 

Today, it’s easier than ever before to get credit cards and loans, thanks to the availability of digital lenders and online lending platforms. Taking on too much credit shows that you are credit hungry, placing you at a higher risk of defaults. So, make it a point to apply for new credit only when you need it, not just because it is available. 

Smart Credit Tip #5

Be careful when you guarantee or co-sign credit accounts with others. 

If you co-sign or guarantee a loan account with friends or family, then you are liable for defaults and missed payments, even if you are not the primary borrower. So, make sure to verify the finances of your friend or family member before you agree to be a guarantor or co-signer. Monitor the joint accounts monthly to track if the primary borrower repays the EMIs on time. 

Smart Credit Tip #6

Keep EMIs to 30% of your monthly pay. 

Ideally, your monthly EMIs should not exceed 30% of your monthly pay. Going over this limit places undue stress on your monthly budget, increasing the chances of defaulting on loan payments. If you want to build your CIBIL™ score, staying within this 30% limit helps you build your credit profile. 

Smart Credit Tip #7

Keep your credit card balances low. 

We are often tempted to use our credit cards to the maximum limit to pay for purchases. While it’s okay to max out your credit card limit once in a while (provided you settle the outstanding bill on time), continually maxing out your credit card limit hurts your CIBIL™ score. 

The credit utilisation ratio is the credit you have used with the overall available limit. Ideally, the credit utilisation ratio should not exceed 10% to 30% if you build a strong credit profile. 

Smart Credit Tip #8 

Do not deactivate old accounts. 

You may have an old credit card that you no longer use. You may be tempted to close this credit card account thinking it’s of no use to you. But, no! Having an old credit card account open is beneficial for your CIBIL™ score. This is because one of the factors that influence your credit score is the average credit history. An old credit card increases your credit history, which in turn improves your credit score. 

Smart Credit Tip #9

Plan for early repayment of ongoing debt. 

Foreclosing or prepaying an ongoing loan is another way to improve your credit score. Try to foreclose a loan by accumulating funds in your savings account. You can use these funds to settle the outstanding debt in full. However, make sure to check the foreclosing terms and conditions to determine whether prepaying the loan offers you significant savings. 

Smart Credit Tip #10

Review and track your credit score and credit reports periodically. 

Check your CIBIL™ score and report regularly to stay on track of your credit score. Make sure to go through your credit report at least once in 3 months to spot inconsistencies and errors. If you notice any mistakes, then make sure to report the error to the corresponding credit bureau (and your lender) to get it resolved and rectified

Improve your CIBIL™ Score with our Smart Tips 

A high CIBIL™ Score makes it easy to access loans and credit cards at the best interest rates. However, it’s not possible to improve your credit score overnight. You need to monitor your credit accounts diligently, formulate a credit improvement plan and take the proper steps to improve your credit score gradually. Start rebuilding your CIBIL™ Score today, and build a robust financial profile.