The TransUnion CIBIL limited is credit Information Company which maintains the credit information of more than 600million individual and 32M businesses in India. In short CIBIL score summarizes how many loans you have and how good you are repaying them. It ranges from 300-900 points. A low CIBIL score means that the chance of getting a loan is very less. Banks follow strict guidelines from RBI/Government to check CIBIL before approving any kind of loan be it Home loan, Car loan or personal loan.
If you’ve recently checked your CIBIL report and surprised to see a low score? Is it bothering you to get a loan for your dream car/home? You have come to the right place. Luckily, the CIBIL score can be improved given sufficient time and some important things to follow.
Below I have outlined some of the main factors you need to consider if you want to improve your CIBIL score. Just keep in mind that it will take anywhere from 3-12 months for your CIBIL to improve after following the things below. Now without further ado let’s check them.
Tips to Increase your CIBIL Score
Pay EMIs on time
Simple but true. It will have a high impact on your CIBIL score. Regular EMIs can help you to get a good credit score. So make sure you have the amount ready for your next EMI before the due date. If you neglect this hobby of paying EMIs on time it can severely impact your credit score in the future. Also, it can force you to pay the penalty as well. So get organized and pay with discipline.
First of all, eliminate all credit card balances and unpaid dues on loans. Talk to your bank and negotiate to close your loan account by paying off any unpaid dues and penalties. Paying off these balances will positively impact your credit score. Also, use credit cards within your spend. It is better to have just one or two loans at any time; it becomes easier to keep track of future payments.
Sometimes the banks may report incorrect details to credit information companies like CIBIL. That is Maybe the no. of days after the due date, settlement type, or extra loan account which you may have knowledge of. To repair these details you need to contact CIBIL and file a dispute against the wrong details present in your CIBIL report. After taking the request from the CIBIL company will contact your bank and update the details if genuine. This can hugely impact your credit score in a huge way.
Keep an Eye on Credit Utilization
A credit utilization ratio indicates the extent of funds used in proportion to the offered by the credit card company. You can be offered a credit limit of Rs. 100000 on your credit card. However, it doesn’t mean you should use the entire portion. A higher utilization makes CIBIL think you are credit hungry and thus lower your score. It is recommended t use 50-60% of the credit limit offered.
Avoid making too many credits inquiries
Several numbers of credit enquires can pull down the score faster. It makes you are credit hungry and further lower your score. A maximum of 3 enquires a month should be okay.
Continue your old credit card
Most of us believe that credit cards that we are not using anymore should be closed. That is because we do not know the impact on your CIBIL score. But in reality, a good credit card that you have managed well with timely payment is a boon. It gives a much-needed boost to your credit score, which is one of the factors that banks consider while assessing your application.
Say no to Joint Accounts
This is yet another important thing to consider. Sometimes we may end up giving surety to our friends/family for getting their loan. Like co-borrower or joint account. Late EMIs of those loans also can equally impact your credit score. So, monitor your joint accounts monthly. Your co-borrower negligence could affect your ability to get credit when necessary.
Frequently asked questions
Below is list few questions asked by various users about how to improve CIBIL score. Also, check if you want more details CIBIL score.
What is a good credit score?
The CIBIL Credit score ranges from 300 to 900 points range. The closer you are to 900, the more the banks will have trust in your ability to repay the loan, and hence the higher the chances of your loan proposal get accepted. However, the credit score anywhere from 750 and higher is considered a good one.
How much time it will take you to improve the CIBIL score?
By following the steps above it can take anywhere from 3 to 12 months to improve your CIBIL Score. It depends mostly on your financial management and how discipline you are paying your EMIs on time.
Follow these tip carefully you should be getting a spike in your CIBIL score within a short time. Good credit doesn’t only get you credit from banks, it also makes sure how discipline and effectively managing your finances at disposal.
What do you think of the list? I hope it was helpful.
Let me know your feedback in the comment section below.