Build CIBIL Score

How to build CIBIL score from scratch?

CIBIL score is one of the most important factors for lending in India. Be it credit card, personal loan, home loans, or even business loan, a good CIBIL score helps you get lower interest rates and higher loan amounts.

We regularly get numerous queries about how to build CIBIL score for loans purposes.

Your CIBIL score is calculated based on multiple factors. When taking care of these factors, you can build a strong CIBIL score. So, let’s look into how to build CIBIL score from scratch to higher levels.

10 important parts to build CIBIL score

Build CIBIL Score

Purchase on EMI

CIBIL score is built on repayment history for credit. And one of the easiest ways in current times is to purchase some durable goods on EMI.

Earlier, you could purchase things on EMI either by loan or by credit card. But, you can purchase items on Debit Card EMI too.

You can shop online or at an outlet for any of the consumer durable goods like Mobile, TV, or Laptop on EMI. Most of these FMCG products including household electronics are available at discounts and EMI plans. You can open an EMI plan for 6 to 18 months. The record of successful repayment of this purchase will build a clean history of repayment and thus a good credit score.

Avoid late payments on bills

To keep building your CIBIL score, paying your bills on time is of utmost importance. You can choose to pay whatever amount (over the minimum payment due of course), but do that on time.

Late payments are reported on a monthly basis to CIBIL and thus they affect your CIBIL score badly.

Get a prepaid credit card

If you really want to build a CIBIL score within 6 to 12 months, then credit card and personal loans are the fastest way. Getting a personal loan without a CIBIL score is a little difficult whereas you can get a prepaid credit card with little effort.

For example, you can apply for an ICICI bank credit card against a Band FD of ₹ 10,000 only. You can use the card just like any other credit card.

The main point to take care of is to pay the bills on time. Without a single delay. And the best way to do that is to use this card only for small spends and pay the bill on time.

Secured Personal Loan

In case your credit score is still building up and you need a loan for some need, then you can also get a secured personal loan. In this case, your real asset like your investments, FD, Vehicle can be used as collateral for granting you a loan.

The same personal loan process can also be used to build CIBIL score. Just apply for a small cash loan – something that you can repay without any issue within a short span of time. The repayment of this loan amount itself will give a strong jump to your CIBIL score. And after giving it a break, you can repeat the process. This will qualify you for higher credit limits.

Low credit utilisation

This one applies to credit cards – all types. How much of the credit limit do you use directly affects your CIBIL score.

Ideally, try to keep your credit card spending below 30% of your credit limit. This means, if your credit card has a limit of ₹ 1,00,000 try to keep your bill to be around or below ₹ 30,000. This is considered good financial behaviour and improves your credit score.

If for some reason you need to spend more or need cash, it’s better to take a loan on your credit card than max out your credit limit. Using your full credit limit is also reported to your credit report and drops your CIBIL score.

How can I increase 100 CIBIL score?

You can increase your CIBIL score by nearly 100 points (this works only if your CIBIL score is not very bad) by following steps –
1. Reduce your credit card usage to about 30% of your credit card limit and pay your bill on time.
2. If you have a running loan, you can partially pay it back to reduce your EMI and outgo obligation.
3. Check your CIBIL report and check to any inconsistencies. File dispute for any charge or query you didn’t raise.
4. Don’t raise any query for new loan or credit card for couple of months when you are working on improving your CIBIL score.

Can I buy CIBIL score?

No, you can not buy a CIBIL score. You can only buy your CIBIL score report.

Does FD increase CIBIL score?

No, having an FD doesn’t impact your CIBIL score. But if you get a credit card against your FD and use it wisely, it increases your CIBIL score.

Does EMI affect CIBIL score?

Yes, your EMI affects CIBIL score. When you pay your EMI on time (positive), it’s reported to CIBIL and if you miss any EMI it’s also reported (negative).
Also, when you opt for EMI on your credit card, it also affects your CIBIL score.

Does debit card EMI affect CIBIL score?

EMI facility is considered at same level for both Debit and Credit card, so yes, debit card EMI affect CIBIL score.

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