The Credit Score Information Bureau India Limited (CIBIL) score plays a significant role in a person’s financial life. This three-digit number is used by lenders to determine one’s creditworthiness, i.e., the risk involved in granting a borrower credit. A CIBIL report summarises one’s credit history, by considering the loans, credit card payments, and other debt-related activities.
A good credit score suggests that the borrower is likely to repay the loans on time. A lower credit score, on the other hand, denotes a risky borrower with a history of late payments or faults. This numeric expression can shape one’s financial future. If you are wondering how to increase CIBIL score?, then this blog is for you. Here, we are going to focus on 10 easy ways to increase CIBIL scores and the different aspects that affect them.
CIBIL Score Range
Firstly, let’s decipher the various CIBIL score ranges and understand what each signifies. The CIBIL score ranges from 300 to 900. A score of 750 or more is regarded as excellent, while a score of 650 or less is regarded as fair. Here is the breakdown:
|
Rating |
CIBIL Score Rating |
Credit Health |
|
Very Poor |
300-549 |
Need Immediate Attention |
|
Poor |
550-649 |
Need Significant Improvement |
|
Average |
650-699 |
Requires Attention |
|
Good |
700-749 |
Fair |
|
Excellent |
750-900 |
Outstanding |
- Poor: If you are in this bracket, you may experience difficulty in obtaining credit, and even if you get, it often comes with extremely high rates of interest.
- Fair: Although you could qualify for credit, the terms might not be the best. Interest rates may be high.
- Good: This category signifies good credit management, often resulting in credit eligibility with favourable interest rates.
- Excellent: With a score this impressive, you can expect the best of loans with low interest rates.
Also Read: Know The Importance of CIBIL Score and CIBIL Score Range
10 Best Ways To Increase CIBIL Score
The following are the top 10 approaches to increase your CIBIL Score.
1. Pay your bills on time:
Make sure to pay your bills on time, such as credit card payments, EMIs, etc. Otherwise, get into the habit of paying the minimum due amount of your bills. This way, you can avoid extra penalty charges and escape from lowering your credit score.
2. Limit credit utilization:
Credit utilization is calculated from the amount you use to the credit card’s limit. So, maintaining a credit limit of below 30% helps keep up the credit score. Exceeding 40% is high credit utilization and it can drastically affect your CIBIL score. So, try to keep your credit utilization ratio low.
3. Avoid multiple credit applications:
Applying for multiple credit cards/loans can increase your credit limit, but also it opens up a hard inquiry. A hard inquiry is a thorough examination of your credit report to determine how much risk you pose as a potential borrower. With each request, there is a possibility for your credit score to reduce.
First, it displays credit-hungry behaviour and secondly, your score will come down even if you are capable of paying the loan/card bills on time. So, take one loan at a time, pay it successfully, and increase your credit score.
4. Diversify your credit mix:
Opt for different types of loans, a mix of personal, secured, retail accounts, long, or short-term loans as well. These will positively impact your credit score and display your ability to repay multiple credit responsibilities.
5. Avoid closing old accounts:
Avoid deactivating old credit cards that are no longer in use. Your credit card history matters, closing one can shorten your credit score. So, keep a record of your old good loans and increase your cibil score.
6. Settle past dues and defaults:
Sometimes, the lenders fail to report or update your credit status, like ‘Settles, Paid’ or slow to report. So, keep a check on such discrepancies. If the situation occurs, contact your creditors and resolve them immediately.
7. Opt for a secured/long-term loans:
Sometimes, EMIs become so heavy that it eats away at your monthly income. Instead of burdening yourself, apply for secured credit cards or loans with long repayment tenure. As a result, you will be able to make on-time payments, avoiding delay, skip, or defaults. This will help you rebuild and increase your CIBIL score.
8. Increase your credit limit:
Try to boost your credit limit to the maximum. Over usage, or increased utilization of your credit limit will make you a high-risk borrower. To maintain a low utilization ratio, consider approaching your creditors or the bank and try increasing your credit limit. This decreases your credit usage and portrays you as a responsible borrower.
9. Monitor your credit score:
Check your credit report once every month, it could possibly avoid any chances of fraudulent activities, transactional errors, or time mismatches. As soon as you detect any suspicious activity, adhere to and resolve them as soon as possible. A healthy credit score requires clear and accurate credit reports.
10. Use credit wisely:
Lastly, remember credit is not free money, it is a financial aid. So, take care not to push your limits to the absolute maximum, rather, use it wisely. Have patience, keep an eye on your finances, and make timely debt payments. Eventually, your credit score and creditworthiness will rise, but it takes time.
Also Read: Alert This Mistake Can Reduce Your CIBIL Score
How To Improve Credit Score Immediately?
If you are someone who is looking how to increase your CIBIL score quickly, consider these key points:
- Rectify any payment delay.
- Catch up with overdue payments and close them.
- Sign up as an authorised user for a person with a good credit history.
- Pay off any outstanding debt.
- Pay down the entire debt on your credit card in one go.
- Boost the amount you can borrow.
- Request the removal of a late payment from your credit report from your creditor.
In case, you are unable to pay off the debts on time, use a credit-builder loan. A credit-builder loan is one that you take out and repay over time. By doing this, you can increase your CIBIL score and establish a credit history.
Keep in mind, these are short remedies to fix your CIBIl Score quickly. It is always better to follow the detailed tips listed above to improve your credit score.
How To Maintain A Good Credit Score?
Maintaining a good CIBIL score is as important as achieving it. To do so, follow these steps:
- Continue paying bills on time.
- Maintain a low credit utilisation ratio.
- Consistently check your credit reports.
- Prevent unnecessary credit inquiries.
- Manage credit responsibly.
- Avoid joint application of loans.
These steps ensure you maintain a good credit report and aid you with benefits like easy credit cards and loans with lower interest rates.
Summing Up
Your CIBIL score is a financial representation that can significantly impact your financial opportunities. By understanding the CIBIL score range, adopting healthy financial habits, and following the 10 best ways to increase your CIBIL score, you can secure a strong credit profile. Remember that improving and maintaining a good CIBIL score is an ongoing process and it requires responsible financial management.
