Banks and credit providers each have their criteria for lending. The RBI mandates that banks use CIBIL scores to evaluate every application. Credit Information Bureau India Limited reports comprise your credit history, borrowing, and repayment. CIBIL scores range from 300 to 900. A CIBIL score below 750 can be a nightmare for people seeking a personal loan because a low score can damage your prospects of receiving credit cards and loans. Many people with low CIBIL scores ignore that they can raise their scores by addressing their adverse reports.
What is a good CIBIL score?
A score below 600 is considered very poor and needs attention. You will have a hard time getting any kind of loan with this score. Scores between 600 and 649 are considered average. You can still get loans with some difficulty, but the rate of interest may be pretty high. Generally, a score between 650 and 699 is considered fair enough. You have a high possibility of getting a loan. A score above 700 to 749 is good. You can get better rates of interest on any loan. You should aim for a 750 or higher score, which is considered excellent. The chances of getting a loan are highest, and that too with a reasonable interest rate.
6 Tips To Increase Cibil Score:
The good news is that you can fix this score. All you need to do is focus on the below-mentioned factors to learn how to improve cibil score immediately:
1) Repayment reminders:
Overlooking debt repayments might damage your credit. Pay EMIs on time. If you delay EMIs, you pay penalties and lose credit. Set reminders to repay if you forget dates. Set prompts and notifications beforehand to improve your repayment consistency. Avoid overusing credit cards and pay the previous debt to boost your CIBIL score. Defaulting on EMIs will incur penalty points and lower your CIBIL score. Experts recommend adopting scheduled repayments to avoid missing due dates and generating the best cibil score for yourself. Sign up for a low-interest rate credit card to further improve your score.
2) Be credit-savvy:
Do not overuse credit. Avoid accumulating too much debt at once. Pay off one loan before getting another. Multiple loans can lower your score. Repay a debt swiftly to boost your CIBIL score. Credit responsibly. Pay it off quickly. You should apply for a few loans at once. To avoid a credit score drop, keep one loan at a time. Repay it, then take another to avoid a credit score drop. Multiple loans at once indicate a cycle of insufficient cash. Your credit score will fall. Then how to improve the cibil score? By repaying a loan, you can boost your credit score.
3) Balanced credit combination:
Good credit mix balances secured and unsecured loans. Personal loans and credit cards fall under unsecured loans. Secured loans include vehicle and home loans. Taking a single type of loan, either secured or unsecured, is frowned upon. Lenders and credit bureaus prefer borrowers with many secured loans. If you have more unsecured loans than secured, prepay them to maintain a healthy mix. Your CIBIL score will improve if your credit utilisation percentage is below 30%. Low credit card debts help enhance your score. A solid balance between credit types and consistent repayment can increase cibil score.
4) Avoid holding joint accounts:
If you currently hold a joint account or are considering applying for one, make sure you clearly understand how the account will be used. As a joint account holder or loan guarantor, your credit score will be affected by the other party’s default. Check co-signed, guaranteed, and joint accounts monthly. Co-signed, guaranteed, or jointly held accounts share missed payment liability. If you are a joint account holder, maintain a close watch on the account to ensure that the other party is making timely payments. If you are a loan guarantor, make sure you can pay the loan if the primary borrower cannot do so. If possible, avoid opening joint accounts and becoming loan guarantors to maintain a good cibil score.
5) Augment your Credit Limit:
Focus on increasing your credit limit. You can easily raise your credit limit by spending within your means. Furthermore, you should make sure all of your bills are on autopay and you make timely payments each month. These actions will show your credit card company that you are responsible and reliable and may lead to an increase in your limit. You should never decline your bank’s offer to increase your credit limit. Are you wondering how to increase cibil score by increasing your credit limit? To improve your credit score, have more credit and use it sparingly. It doesn’t imply you’ll spend more each month; you’ll have to manage your money better.
6) Keep old cards:
Many assume they must terminate unused credit card accounts. But they don’t know how that affects CIBIL. Skillfully administered credit card accounts with regular payments can boost creditworthiness. It adds extended credit history to your credit report, a crucial element in evaluating your creditworthiness. Keep a steady payment history as long as possible. Remember, the longer your credit history, the better your credit rating and the easier it is to get credit. Keep the account active by making regular, small transactions. Be sure to close the account only if you don’t plan to use it again.
Now that you know how to increase cibil score be wise, diligent, and consistent with your spending, borrowings and repayments. A higher number on credit score indicates a greater level of trust from lenders. It also indicates a lower risk of defaulting on a loan. It generally takes six to twelve months to increase your credit score. If you have a poor CIBIL score, follow these strategies to boost it. This will help you avoid debt and secure future credit. High CIBIL scores indicate responsible spending and solid payback behaviours.