How to improve your CIBIL Score?

Snneha Lukaa
March 4, 2020 0 Comment

Your CIBIL Score is one of the most important data points that lenders check on when assessing your credit eligibility. Especially, when applying for a personal loan having a good credit score is essential since this the loan is of offered without any collateral and guarantor. Having a high credit score is a sign of good credit history and responsible credit behaviour, whereas a low score indicates bad credit behaviour and irresponsible money management. CIBIL Score is generated by TransUnion CIBIL by taking into account the data in the credit report that records all your financial transactions such as number of loans, credit cards, EMI payments and others. Having a low credit score can lead to loan rejection or approval of the same at a very high interest rate. Therefore, having a good credit score is essential to ensure you get quick access to funds in an easy way without having to bear a high rate of interest. Read this article to know how you can improve your CIBIL Score.

What is considered to be a good credit score?

CIBIL Score is a three-digit numeric score, ranging from 300-900 with 300 being the lowest and 900 the highest. To be able to secure a personal loan, it is important that you have a minimum credit score of 600. The minimum requirement of the credit score may vary from lender to lender.

Tips to improve CIBIL Score

Pay off your loan EMIs on time: If you have taken a loan i.e. secured or unsecured one, ensure that you don’t miss out of any of the EMI payments as it can hurt your credit score, thereby making it difficult for you to secure more loans in future. If you are unable to pay off your loan EMIs, then it is best that you approach a lender to restructure your EMI and pay off the debt.

Don’t make too many credit applications: If your credit card or personal loan application has been rejected then remember the same will get recorded in your credit report. So if you go and apply with another lender, then they may also reject your loan application on the basis of low score. Hence, the best thing you can do is wait and re-apply after a span of 2-3months.

Pay your credit card bills on time: Paying off credit card bills on time is a sign of good credit behaviour and helps you in improving the score. Ensure that you don’t pay only the minimum dues and pay off the entire bill due amount.

Avoid taking too much debt at a time: The number of loans that you hold has a great impact on your credit score. Taking multiple loans shows that you are unable to manage your finances and further decreases the score. On the other hand, if you are able to pay off the loan EMIs on time, then it can boost your score.  

Monitor your credit utilization ratio: Using a credit card to make purchases may help you get cash back and win reward points, but it is essential that you keep the credit utilization only within 30% of your credit limit. Doing this can help you improve the credit score and give the lenders a sense of assurance that you are not dependent on credit card for making all the purchases.

Ensure you maintain a mixed bag of credit: There are two types of loans you can opt for-secured and unsecured loan. Taking too many unsecured loans has a negative impact on your score, whereas opting for secured loan like home or car loan can in fact help you increase the score. 

Check for errors in your credit report: It is important to note that your financial transactions may not be the only reason for a low credit score. There may be errors in your credit report as well due to which it is imperative that you regularly keep on checking the same. Note down the incorrect information presented in your credit report and report the same to CIBIL authority to rectify the errors and update the report with correct details.

Following the above tips can help you improve your credit score. However, it is important to note that your score cannot be improved overnight and will take around 3-6 months time to improve. 

Credit Fair can help

You can apply for a loan on Credit Fair with a score as low as 600. You can look to improve your score by making timely repayments and also be eligible to get another loan from us.