Tips to Increase Your CIBIL Score

CIBIL Score ranges between 300 to 900. Having a good CIBIL or credit Score means your creditworthiness is high. A high CIBIL Score helps you get approval for a credit card and loan quickly. Also, you can negotiate for the lowest interest rate and charges, flexible tenure, desirable loan amount and higher credit limit, better terms and conditions, and other benefits.

In this post, we will discuss the top ways of improving CIBIL Score and frequently asked questions.

How to Boost Your CIBIL Score?

Here are some of the proven ways to enhance your credit score:

1. Timely Payment of Credit Card Dues

If you pay off outstanding credit card bills on time, it will boost your CIBIL Score. You can pay the basic amount due and avoid repercussions. However, paying the entire due amount will help overcome late payment charges and accrued interest. The minimum due amount is a small portion of the billing amount. But if you delay paying it, the amount is applicable to interest and taxes. So, in the next billing cycle the amount of debt mounts.

2. Know Everything about Your New Credit Card

Credit Cards give you flexibility on spending. But a higher number of credit cards can risk high expenditure and interest amount, if you do not use those judiciously. So, whenever you apply for a new credit card, ask yourself if you need one. Also, check for any hidden charges, other fees applicable, and calculate the cost of maintaining the new credit card.

Do all the verifications until you are completely satisfied that you are making the right decision of choosing a new credit card. If you have a number of credit cards, maintain those and pay off dues on time so as to have a strong CIBIL Score.

3. A Healthy Credit Mix

If you opt for a credit card or loan wisely, then definitely this will assist to increase CIBIL Score. But those who depend too much on unsecured loans alone, may have to face otherwise. So, it is advisable to choose a healthy credit mix of unsecured and secured loans, as well as short term and long-term loans. While doing so, timely repayments of EMIs are mandatory for best results. This will prove that you are a responsible borrower.

4. Check Your Credit Report for Errors

Errors or inconsistencies in CIBIL Report may have a negative effect on your credit score. Errors may include incorrect information, taking time in updating repayment details, etc. Also, if someone has misused your credit card, then details of billing/dues will reflect in the report. You will receive a free credit report once a year. At this time, you can check for any unsolved error, and get those rectified.

5. Minimum Credit Utilization

Limit your credit utilization on credit cards up to 30% of the credit limit. Using more than this percentage of the approved limit, accounts in high credit utilization. The latter is detrimental for your CIBIL Score. At the same time, not using the credit card if you have one, may have a negative impact on your credit score. So, pay off the dues in advance, and keep a low credit utilization for best CIBIL Score. If the credit limit is insufficient for your needs, look for a higher limit card.

Frequently Asked Questions about Improving CIBIL Score

Here are the FAQs:

CIBIL Score Interpretation
NA or NH
  • The person does not have any credit history. Thus, the credit bureau has no information on credit behaviour of the individual.
  • The person’s CIBIL Report may show hard inquiries by financial institutions. But none of them have sanctioned a loan to the individual.
  • Otherwise, the credit bureau has received no credit information of the person in the last 2 years.
1-5
  • The person has a credit track record, but that is less than 6 months
  • Lower is the risk for borrowers with higher index.
300-900
  • The person has a credit history that is higher than 6 months. The same has been reported to the credit bureau in the last 2 years.
  • Lower is the risk for borrowers with higher scores.

The credit bureau cannot change or delete records of a person from his/her credit information report (CIR). The institution collects information from banks and financial institutions and records the financial history. Then it assigns a credit score as per the data. There is also no list for bad or good credit or defaulters.

Your CIBIL Report will contain details of your current and past credit behaviour. Based on these activities, you will receive a credit score. The lender will go through this information and take a call on your loan application. Thus, retaining records of your past and good loan accounts is beneficial for your creditworthiness. If the credit report shows a debt being repaid as per the agreed terms and conditions, then it has a positive impact on the lender, as well as your CIBIL Score.

Whenever you are in need of funds, you may think of taking a loan. But remember to apply for one loan or fewer loans at a time. Multiple loan applications predict that you are credit hungry. And this may adversely affect your credit score. Also, lenders undertake a hard pull on your credit report to check your eligibility for the loan. When too many lenders do this at a time, then it is not great for your CIBIL Score.

A hard inquiry aids in thorough analysis of your financial history, and assess the risk of having you as a borrower. Hard pulls show up in credit reports for at least two years. Thus, in a short period, too many hard inquiries are not good for your CIBIL Score. So, apply for a loan only after researching well if the deal will suit your requirements. This will allow you to limit making multiple loan applications.

It takes time to build a good CIBIL Score. Also, if your credit score is low or bad, then repairing it will ask for consistent good financial behaviour. You have to repay the dues on time. If there is any new line of credit, then perform all the actions as per the terms of the lender. Keep a check on your spending pattern as well. This will allow you to restrict unnecessary expenses and save the most to repay debts. Down the line, your CIBIL Score will improve.