10 Smart Steps How to Improve Your CIBIL Score Immediately

CIBIL is one of the key credit bureaus in India that maintains people’s credit history and computes their credit scores. The credit score plays a crucial role in determining an applicant’s eligibility for credit-based financial products. Whether it is a credit card or a home loan, lending institutions will check the credit score before approving the application. The credit score quantifies the creditworthiness of individuals based on underlying factors set by credit bureaus. For example, the repayment history is a critical determinant for any credit score computation. In addition, other crucial factors like credit mix, utilisation ratio, etc., play a vital role in calculating the credit score.

How to increase the CIBIL score?

However CIBIL scores or credit scores can vary between 300 to 900 points, depending on the person’s credit profile you must know how to increase cibil score. A higher credit score can help people obtain lower interest rates, higher loan amounts, and better terms in general. Therefore, it is essential to improve your credit score before applying for a loan. Here are some tips to improve your credit score faster.

Credit utilization ratio

Another important factor that influences the credit score is the utilisation ratio. It is the percentage of credit used out of the total credit limit available. For example, if a person has a credit card limit of INR 2,00,000 and has spent around INR 50,000, the utilisation ratio will be 25%. It is crucial to keep the credit utilisation ratio lower than 30%.

New credit applications

It is crucial to check the minimum eligibility requirements before applying for new credit cards. Apply for a new credit line where the chances of approval are higher. You must not apply for multiple credit cards at the same time. Credit card institutions often conduct a hard-line credit inquiry for checking the credit score. This inquiry can reduce the credit score by a few points. Multiple applications mean multiple inquiries and a compounded negative impact on the credit score.

Timely repayment of the outstanding amount

Most people have the habit of repaying the minimum amount due on their credit cards. However, it is crucial to repay the full outstanding amount to improve the credit score. In addition, you must repay all credit card EMIs on time and in full to maintain a healthy score. Choosing the right EMIs using an EMI calculator for home loans is recommended.

Keep a tab on credit reports

Monitoring credit reports regularly is crucial to find out any discrepancies. It also helps keep you on the right track and take the required corrective measures for improving your credit score. It provides detailed insights into what is decreasing or improving the credit score. It is easier to take the right step when you know what’s wrong.

Keep the old accounts in your report

Many people do not maintain records of their old credit accounts from credit reports. It is important to avoid these mistakes and maintain all credit histories. Old credit accounts help in improving your credit score. Regardless of the old accounts’ performance, you should not remove them from the credit report.

Credit mix

A diverse credit mix will have a positive impact on the credit score. It is a crucial factor in determining your credit score. A balanced combination of loans and credit cards can improve the credit mix. Having different types of loans with varying tenures is also recommended. It will result in a higher credit score.

Focus on increasing the credit limit

People should focus on increasing their credit limit if they are likely to spend more using their credit cards. However, it is essential to be mindful of the credit utilisation ratio. A higher credit limit will increase the utilisation limit, but it should not be overused. Therefore, always keep the maximum utilisation limit in mind.

Choose a longer loan tenure

It is recommended to choose a longer loan tenure while opting for any type of loan. It will result in lower EMIs that can be quickly repaid on time. In addition, a lower EMI will not disrupt the monthly budget and will provide more flexibility in repaying the borrowed amount.

Don’t become a joint account holder

People with no or poor credit history often tag a joint account holder for availing of a credit card or a loan. However, it is important to note that if you have a joint account, your credit score will be affected by the actions of the other account holder.