improve cibil score

Best 5 tips to improve CIBIL score

If you want to get a loan or credit card from banks, it’s important that your CIBIL score is high enough. If the application got rejected because of low scores then there are some things which can be done in order not only to increase but also maintain good standing on poor financials like paying off old debts as soon as possible so they won’t affect future applications.

If your CIBIL score is low due to any reason, then you can use the below-mentioned tips to improve CIBIL score. These tips can improve your CIBIL score within 3-6 months.

Tips to Improve CIBIL Score

Below mentioned tips are most effective to improve your CIBIL score in the shortest possible time.

1. Pay your credit card dues – full and on time

If you have a credit card ( ), then the fastest way to positively affect your CIBIL score is to pay your credit card bill. Full and on time.

Even if that means you have to a take personal loan to pay your credit card bill.

Your credit card is a form of unsecured loan from your bank to you. This shows the highest level of trust from a lending organization’s point of view. Thus, maintaining a good payment record is given the highest value in calculating your CIBIL score.

2. Limit your credit card usage to around 30%

Using 30% of your credit card limit and paying your dues on time is the best scenario to keep your CIBIL score in good shape. For example, if you are credit limit is ₹ 1,00,000, then it’s best to keep your credit card usage to be around ₹ 30,000 on monthly basis.

If you need to use more of your credit limit, it is a good idea to do that once in a while. If you consistently need to use more of your credit limit, then it is better to get your credit limit increased.

3. Don’t close your old credit card

If you have an old credit card, don’t close that credit card for a new card. Even if the new credit card has a better offer. Talk to your customer care and get the old credit card updated to the new offer.

The reason is simple, the longer you hold a credit card, the longer is your financial history on that card. This gives a huge boost to your credit score.

4. Be careful when signing as a loan guarantor

When you sign on a loan application as a loan guarantor, then it is nearly equal to applying for that loan for yourself.

You being a loan guarantor is also recorded by banks and it’s sometimes included as your liabilities when applying for a loan for yourself. So avoid signing as a loan guarantor unless it is necessary to do so.

5. Avoid applying for loans or credit cards frequently

If you have a bad credit score currently, then avoid applying for a credit card or loan. It will get rejected and that also impacts your credit score.

The best way is to use the above-mentioned steps to improve your credit score and then apply after some time (preferably after 6 months).

If you need a loan with a bad CIBIL score, then it’s best to talk to a DSA and he might be able to find any NBFC with lower CIBIL score requirements. But it will be approved at a slightly higher interest rate. We usually recommend avoiding this unless you have a very urgent and important need or you are taking a loan to pay any obligation and reduce your debt.

Conclusion

A good credit score is the bare minimum requirement for getting loans at the lowest interest rate. It also helps you to get the best deals on credit cards too. These days even companies also add CIBIL score as one of the requirements of your background check.

It’s a good idea to keep a watch on your credit score on regular basis. RBI has provided the option for you to get 1 free credit report each year from CIC. Use this option to keep a watch on your credit report and also raise disputes on any wrong entry there.

Important Questions

How to improve your CIBIL score quickly?

1. Pay your credit card dues on time.
2. Limit your credit card limit usage to around 30% of your credit limit.
3. Get your credit card limit increased.
4. Never skip an EMI
5. Don’t show any sign of risk in your financial profile.

Is 700 a good CIBIL score?

Yes, 700 is a good CIBIL score. A score between 700-900 is considered very good by financial institutions for lending purposes.

Can I buy CIBIL score?

No, you can’t buy a CIBIL score. You can only buy CIBIL reports. If someone claims to improve your CIBIL score in lieu of some money, please avoid it.
Your CIBIL score is calculated based on data received from multiple institutions like your bank, credit card company, previous loan company etc. You can’t simply buy a good CIBIL score.

Does FD increase or improve CIBIL score?

If you book an FD and then take a credit card against it. Then by paying that credit card bill on time and using 30-40% of your credit limit each month, you can definitely improve your CIBIL score.

How fast does the CIBIL score increase?

Normally, when you follow steps to improve CIBIL score, it takes around 6 months to 9 months for CIBIL to increase to meaningful levels.

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