8 Best Ways to Improve Your CIBIL Score Quickly

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Are you having trouble getting approved for a loan or credit card? It may be because of your CIBIL score. In India, the Credit Information Bureau (India) Limited (CIBIL) maintains the credit history of individuals and companies. Banks and other financial institutions use this information to evaluate an individual’s creditworthiness. If you have a bad CIBIL score, don’t worry; there are several ways to improve it. In this blog, we will discuss what CIBIL is, what a CIBIL score is, and eight tips on how to improve your CIBIL score.

What is CIBIL?

CIBIL is India’s first credit information company, established in August 2000. It collects and maintains credit information of individuals and companies and provides this information to its members in the form of a credit report. CIBIL’s members include banks, financial institutions, and other credit grantors.

What is the CIBIL Score?

A CIBIL score is a three-digit number that ranges from 300 to 900. The higher the score, the better your creditworthiness. Banks and other financial institutions use this score to evaluate an individual’s creditworthiness. A score of 750 or above is considered good, while a score below 650 is considered poor.

What is Considered to have a BAD CIBIL Score?

A bad CIBIL score is when your score is on the lower end of the 300 to 900 range. If your score is below 600, it’s considered poor and shows that you have trouble managing debt and paying bills on time. A score between 600 and 650 is below average and suggests that you may have difficulty managing credit responsibilities.

There are Several Reasons Why you may have a Bad CIBIL Score, including:

• Late or missed payments on loans and credit cards
• High credit utilization
• Applying for multiple loans or credit cards in a short period of time
• Defaulting on loans or credit card bills
• Having too many unsecured loans
• Short credit history
• Errors in your credit report

Remember, maintaining a good CIBIL score is essential if you want to get approved for loans and credit cards in the future.

Also, Read: Credit Score vs CIBIL Score: Are they Even Different?

If You Have a Bad CIBIL Score, Here are NINE Tips on How You Can Improve It:

1. Check your Credit Report

The first step to improving your CIBIL score is to check your credit report. You can get a free credit report from CIBIL once a year. Review your report carefully and check for errors or discrepancies. If you find any errors, raise a dispute with CIBIL and get them corrected.

2. Pay your Bills on Time

Late payments have a significant negative impact on your CIBIL score. Make sure you pay your bills on time, every time. Setting up automatic payments or reminders can help you stay on track. Ensure all your loan EMIs and credit card bills are paid on time. Late payments negatively impact your score.

3. Reduce your Credit Utilization

Credit utilisation is the percentage of your credit limit that you are currently using. The higher your credit utilization, the lower your CIBIL score. Try to keep your credit utilisation below 30% of your credit limit.

4. Avoid Applying for too much Credit

Every time you apply for credit, it shows up on your credit report. Too many inquiries in a short period can negatively impact your CIBIL score. Only apply for credit when you need it.

5. Maintain a Good Credit Mix

Having a mix of credit accounts, such as a credit card, personal loan, and car loan, can positively impact your CIBIL score. Make sure you maintain a good mix of credit accounts.

6. Don’t Close Old Credit Accounts

Closing old credit accounts can negatively impact your CIBIL score, especially if they have a good payment history. Keep your old credit accounts open, even if you don’t use them.

7. Resolve Overdue Accounts

Overdue accounts can have a severe negative impact on your CIBIL score. If you have any overdue accounts, resolve them as soon as possible.

8. Use a Credit Card Responsibly

Using a credit card responsibly can positively impact your CIBIL score. Make sure you pay your credit card bills on time and don’t exceed your credit limit.

9. Avoid Co-signing Loans:

Be cautious about being a guarantor or co-signer for loans, as any default on those can affect your score.

If you follow these tips, you can improve your CIBIL score in a few months.

However, if you need to improve your CIBIL score quickly, here are four tips to follow:

Also, Read: What is Credit Score? Factors, Calculation & Ways to Improve

Improving CIBIL Score in Just a Month: Follow these Tips to Improve:

1. Dispute Errors on your Credit Report

If you find any errors on your credit report, raise a dispute with CIBIL and get them corrected. This can quickly improve your CIBIL score.

2. Pay Off your Credit Card Balances

Paying off your credit card balances can significantly reduce your credit utilization and improve your CIBIL score.

3. Negotiate with your Lenders

If you have outstanding debts, negotiate with your lenders to settle them. This can significantly improve your CIBIL score.

4. Get a Secured Credit Card

A secured credit card is a credit card that requires a security deposit. It can help you build credit quickly and improve your CIBIL score. These cards work like regular ones, but you give them a deposit upfront (like a safety net). This deposit shows banks you’re responsible, which helps your credit score rise faster.

5. Enhance your Credit Limit

Enhancing your credit limit with your existing lender can be a valuable step towards establishing yourself as a responsible borrower. Demonstrating prudent financial management practices, such as maintaining a credit utilization ratio below 30% and ensuring consistent, timely payments on all your bills, can favorably position your request for a credit limit increase.

Also, Read: NBFC Loans Without CIBIL Score: Your Complete Guide

Why is your CIBIL Score Important?

As more banks and lenders open up across India, getting loans may seem easier. However, lenders face risks so rely on credit scores to assess borrowers.

Your credit score, from agencies like CIBIL, is key in getting approved for loans. Lenders use it to decide how reliable you’ll be at repaying.

CIBIL scores rate your loan and bill payment history. Most lenders check here first to see how responsible you’ve been handling credit in the past.
It’s important to maintain a good score over time. A higher score means lower interest rates and better chances of getting the loans or credit cards you need.

To Sum Up,

Your CIBIL score plays a crucial role in your financial life. A good CIBIL score can help you get approved for loans and credit cards with better terms and conditions. Follow these tips to improve your CIBIL score and take control of your financial future. With a little effort and discipline, you can improve your CIBIL score and achieve your financial goals.

Also, Read: 8 Best Ways to Improve Your CIBIL Score Quickly

FAQs:

1. Does my Bank Balance Affect my CIBIL Score?

No, a bank account with a negative balance or an inactive account does not impact your CIBIL score. CIBIL doesn’t track your bank account details or balances, so these factors don’t affect your credit score.

2. Can a Payment that is Late by One Day Impact my CIBIL Score?

A single instance of a late or missed payment can adversely affect the CIBIL score for an extended period and can diminish the borrower’s credit reliability.

3. Is there an Effect on the Credit Score due to a Payment being Late by 7 Days?

A payment that is delayed by less than 30 days is generally not expected to majorly influence a person’s credit score. On the other hand, a payment that is overdue by 30 days or more is categorized as a “severe” delinquency, which can considerably affect the person’s credit score.

4. What’s the Recovery Time for Me if it is from a Single Late Payment?

Recovery time from a late payment varies. It depends on your credit history, how late the payment was, and the credit scoring model.

Also, Read: How to Get Loan Without a CIBIL Score?