Learn How To Improve Your CIBIL Score In 10 Simple Ways
Here's how you can enhance your CIBIL score and get a better deal the next time you look for credit.
It’s a known fact, that the CIBIL score plays a huge role in determining your eligibility when banks and lenders consider your loan application. However, if you’re new to the term, it is a 3-digit number summarising your credit history that lies within the range of 300-900. And today we’ll learn how to improve your CIBIL score.
Now, if your CIBIL score, more commonly known as your credit score, falls in the good or excellent category, it’s much easier to get a loan. However, if your score is low, there’s a high chance your loan application might get rejected. Hence, it is always advisable to maintain your CIBIL score closest to the upper limit.
The following table displays how your CIBIL score is categorized by banks and lenders:
Now we know what a good or excellent CIBIL score is, but how do you maintain it? More importantly, how do you get there? Learn how to increase your CIBIL score with these 10 tips:
Set Reminders And Settle Your Dues On Time - It is of utmost importance to pay your dues on time. And we’re not just talking about the minimum amount required to be paid every month. To improve your CIBIL score, you need to pay off your entire dues on time.
Regularly Monitor Your CIBIL Score For Any Errors - You need to regularly check your CIBIL Report to ensure everything has been correctly calculated so that your score is accurate. Sometimes, CIBIL may make mistakes or delay recording some details that might affect your credit score. Hence, always keep a close check.
Limit Your Credit Utilisation - Try to avoid maxing out your credit cards at any cost. Always limit your credit utilisation to 30% of your limit to maintain a good CIBIL score. Only on rare occasions should your usage go above 60%.
Increase Your Credit Limit - If you observe that you end up utilizing more than even 60% of your credit limit, it is always good to ask your bank for an upgrade in your credit limit. The key is to have ample credit from the bank, but use only a minimum and pay it all back once the bill the generated.
Maintain A Healthy Mix Of Credit - Don’t always go for unsecured credit such as credit cards and personal loans, try getting a home loan or auto loan as well. This will help you balance out your credit, making you seem more credible to your future lenders.
Be Very Cautious When Being A Co-signer/Guarantor - If you have co-signed or guaranteed a loan for someone, make sure they pay up on time. Any defaults on their behalf could also lower your score.
Monitor Your Joint Accounts Regularly - Liabilities of not just your personal account, but your joint accounts also affect your credit score. In fact, if the other partner in a joint account takes a credit card or loan from that account, your credit score will also be affected in case of payment defaults.
Avoid Taking Too Much Debt At The Same time - Whether you borrow money via loans or take up a credit card, never take multiple loans or use multiple cards around the same time. It gives a very bad idea about your finances to CIBIL and your future lenders.
Choose Longer Tenure For Loan Repayment - Getting a longer tenure for your loans gives you a smaller EMI to pay every month. Lesser the money, lower the chances you’ll default on a payment. Hence, it helps to maintain a good credit record.
Be Patient And Create A Good Credit History - Your credit history won’t be created overnight. You need to be patient and persistent towards your goal. Be smart when taking credits in the form of loans or cards and make sure to pay your dues in full on or before time.
That’s how you’ll be able to increase and maintain your CIBIL score.
This article does not intend to pass on any financial advice and BQ Prime does not endorse any of the funds/schemes mentioned above. Please invest at your own discretion.