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5 Simple Ways to Improve Your CIBIL Score

In the past 5 years, people have searched for the term CIBIL score with increasing density.

In fact, the question “How to improve CIBIL score” garners a little less than 52 Lakh answers on Google. These numbers indicate the popularity of this term and show just how eager people are to increase their CIBIL score. In this article, we will tell you exactly how you can improve your score with just 5 simple tips. But before that, let’s answer what a CIBIL score is and why it is so important.

In simple words, your CIBIL score is the 3-digit number given to you that decides your creditworthiness. It is based on numerous factors like your repayment history, credit utilisation, and debt-to-income ratio among others.

Needless to say, your CIBIL score impacts your chances of getting a personal loan immensely. The higher your score, the better your chances are. So it is very important that you maintain a good CIBIL score.

Fact: The CIBIL score gets its name from the Credit Information Bureau (India) Limited, the most popular of the 4 companies licensed by the RBI to function as credit information companies.

Let’s see how you can calculate your CIBIL score so that you can improve it if needed.

How to Calculate your CIBIL Score?

As mentioned above, the CIBIL score is a 3-digit number, and that number ranges between 300 and 900. Generally, a score of 700 and above is considered to be good, a score between 500 and 700 is decent, and between 300 to 500 is considered poor.

In fact, 79% of the total loans disbursed are to people who have a CIBIL score greater than 750.

Now, there are online calculators that can show you your CIBIL score using just your basic information (name, phone number, email address, etc). It also helps to know which factors affect your score by how much. You can read more about the determining factors of your CIBIL score here

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How to Improve your CIBIL Score?

Needless to say, the factors that affect your score are the same ones that can help make it better.

In this segment, we’ll see what you can do to improve your CIBIL score.

1. Clear your debt on time

It is undoubtedly one of the most effective ways to improve your score. All you need to do is pay back your debt on time. Make sure all your EMIs are paid timely, all your bills are cleared, and if there are any outstanding dues, try to pay them as early as possible.

2. Pay your EMIs on time

Now this can be a subset of clearing your debt on time, but to be honest, we all have almost forgotten to pay at least one EMI on time, haven’t we? So this warrants a mention of its own.

You can opt for any kind of reminder, be it an alarm or automatic payment, or whatever works for you, as long as your EMIs are paid on time. You can even opt for a longer loan tenure to lower each month’s EMI amount.

3. Limit your credit utilisation

Limiting your credit utilisation to 30% of the total credit available to you is one other way to keep your score high. If you use more than that, it looks like you need credit frequently and have difficulty surviving on your income.

To achieve this, a good way is to borrow a mix of credit, like secured and unsecured loans, credit cards, gold/home/vehicle/education loans etc, and, of course, to pay them back on time.

4. Report discrepancies

This is one thing people generally tend to forget, but if even after you do everything right your score doesn’t improve, it might be because of some discrepancies in your credit report.

Sometimes, due to these discrepancies, your CIBIL score gets affected negatively, and you are left clueless about the reason. To avoid this from happening, keep a check on your credit report proactively and report any discrepancies you find.

5. Don’t apply for multiple new credit lines

This is quite simple, actually. What happens when you inquire about multiple new credit lines (credit cards, loans, mortgages, etc), is that each inquiry is logged in your report.

Now, with every unsuccessful inquiry, the authorities get the idea that your application was rejected because the lending firms did not deem you fit enough to repay the credit. This has a direct negative impact on your CIBIL score and any further loans you might take.

So, do not apply for a lot of credit lines in a brief span of time.

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📗Want to know your credit score? Get Credit Report Now!

Conclusion

In this article, we covered the factors responsible for your CIBIL score, how you can calculate it, and how to keep those factors in check to improve your score for better chances of availing yourself of credit.

If you follow these 5 steps, your score will gradually but surely improve, and you will be able to get loans with better terms and more lenient repayment schedules. You can learn more about your credit score and get a credit report  here

But if you need a loan urgently (or before you have a chance to improve your score), you can always opt for KreditBee. This online loan app is one of the best and quickest ways to get a personal loan.

Just download the app, and follow the steps to submit your application, and we will take care of the rest. For any further inquiries, you can reach out to us at [email protected] or simply call +080 44 292 200.

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