8 Most Effective Tips to Improve Your CIBIL Score

Best Ways to Improve Your CIBIL Score – Easy Steps

1. Pay your dues on time
2. Check your credit report
3. Keep a healthy credit mix
4. Limit your credit utilization
5. Boost your credit limit
6. Use credit prudently
7. Apply for new credit cards
8. Keep old debt on your credit report

The CIBIL score is also known as the CIR, i.e., Credit Information Report. The CIBIL score is gleaned using the credit history found in the CIBIL history. It is three-digit arithmetic concise of a consumer’s credit history and reflects a person’s credit history. It does not include the details of your investment, savings, and fixed deposit. The CIBIL Score plays a critical role in the loan application process. Payment history, credit mix of loans, inquiries, and credit utilization are the four primary elements that impact a consumer’s CIBIL score.

What is the CIBIL score?

We refer to a CIBIL score as an individual’s credit payment history across many loans and credit institutions. It is based on past borrowings and repayment practices regularly shared by the bank. The closer your credit score is to 900, the better; anything below 700 should be taken seriously. It is calculated using credit data from the previous 36 months. It is built on 36 months of credit history. However, your credit score cannot be swapped nightly. It would help if you made more or fewer changes in your financial habits to make a notable difference.

Best Ways of Increasing your CIBIL Score

1. Pay your dues on time 

Repay your outstanding credit card bill on time to rank your CIBIL score. Get yourself organized on missing EMIs and delayed payment of Credit Card. Set reminders to pay off your outstanding debts and be punctual. Delayed payments for your EMIs will lead you to pay penalties and lower your credit score. To prevent having your loan application rejected, keep track of your CIBIL Score and Report.

2. Check your credit report 

Check for errors in your CIBIL report regularly for any inconsistencies. There can be several unidentified errors that might pull your CIBIL score down. CIBIL may make mistakes while updating your records, incorrect information against reports, or delayed recording reports will bring down your CIBIL score. If you notice such errors, rectify them immediately. A good credit score will also help you get a better interest rate.

3. Keep a healthy credit mix 

It is beneficial to have a balanced mix of secured and unsecured loans, such as home or auto loans. A consumer with a large number of secured loans is preferred by the banks and helps maintain a good credit rating. A consumer with a large number of unsecured loans is viewed negatively. Prepay your unsecured loans to keep a healthy mix. Your CIBIL score is very crucial in the loan application process.

4. Limit your credit utilization 

Do not use your credit card for all transactions. Try to maintain your credit utilization ratio at 30% or less than 30% to prevent your credit score. Also, if you do not use your credit card at all, it will highly affect your credit score. We should pay your credit card bill on time. If an individual uses more than 30% of a credit card, it is considered a high credit utilization. You may opt for a high credit limit to increase your credit score quickly.

5. Boost your credit limit 

Boosting your credit limit will lower your credit utilization and increase your credit score instantly. If a consumer uses his total credit limit or beyond, the credit utilization ratio will increase and increase the risk of default. As the risk increases, the credit score gets impacted. Disciplined credit management is crucial to improving your CIBIL score.

6. Use credit prudently 

It is advisable not to take on too much debt at one time. It is healthy to repay the ongoing loan before taking another one to maintain your credit score. If you take too many loans at one time, it will show that you do not have sufficient funds to pay them all, making the score go down and improving your credit score instantly. Repaying your current loan will help boost your credit score.

7. Apply for new credit cards 

 If an individual has many credit cards, it will help them make high-value purchases. Before applying for a credit card, be sure you’re eligible. Also, apply to banks where the chances of your loan application getting approved are more. Having too many debts in life affects the CIBIL score.

8. Keep old debt on your credit report 

Your CIBIL score consists of your past credit behavior and based on your history, the bank approves your loan application. Keeping track of your past secured and unsecured loan is a good habit for your credit score. Keep your good accounts active for as long as possible to see an instant rise in your CIBIL score. Monitor all the different types of bank accounts owned by you.

Conclusion

People think that lending money to banks and agencies is relatively easy, not until and unless you have a good credit report with a good CIBIL score. When an individual approaches a bank or financial institution, the foremost task done by the lender is to check their CIBIL score. 
If your CIBIL score is poor, the bank will not process your loan application. The CIBIL score works as a first impression for the lender.
A scoring system uses many data points and macro-level credit trends to calculate the CIBIL score.

Stay alert by checking your report regularly to avoid any inaccuracies. Try to understand the factors that may have impacted your credit score and take significant measures to improve it gradually. Improved credit score will allow you to positively manage your credit debt ratio without affecting your CIBIL score. However, practice these habits to increase your CIBIL score over time.