Five Tips To Improve Your CIBIL Score

A high CIBIL score of 750 and above (out of 900) is considered an advantage when you are seeking a fresh line of credit like a loan. Lenders refer to your CIBIL score when you are seeking loans, to assess your credit. The higher your credit score, the higher your chances of getting better deals on the loan you are seeking.

A poor CIBIL score can be a nightmare, when you are in urgent need of funds. Thus, if you are seeking to improve your credit score to better your chances of getting a loan and want to know how to improve CIBIL score quickly, here are some tips on CIBIL score for you.

1. Look at Credit Card Debts

More often than not, the factor that impacts your CIBIL score the most is your credit card. If the outstanding balances on your credit cards are high, the first thing to do is to clear the outstanding debt. You can also consider liquidating some assets such as fixed deposits or mutual fund units to repay this debt. Removing outstanding balances on your credit card will improve your CIBIL score. The thumb rule of credit card usage is to curb spending and make month-on-month repayments on your credit cards. To know how you can use a credit card to improve your credit score, click here. Overall, financial discipline and judicious credit card spending is the answer to how to improve CIBIL score over the long term.

2. Make Regular Repayments on Existing Credit Lines
One of the major factors affecting your CIBIL score is your repayment track record. To maintain a high CIBIL score, it is imperative to make regular and timely repayments on your existing loans and credit cards. Consider chalking out your monthly budget in a manner that your repayments on your current credit lines are taken care of, before incurring other expenses.

3. Keep Credit Utilisation Below 30%

Keeping a check over the amount of credit you use as against the total credit made available, is another way to keep your CIBIL score high. In financial parlance, this is called credit utilisation. To maintain a good CIBIL score, try to keep your credit utilisation under 30%. If your credit score is low and you want to know how to improve your CIBIL score instantly, one way to do it is bringing down your credit utilisation by enhancing the overall limit on your credit card.

4. Do not Close old Credit card Accounts

Some credit users erroneously believe that closing old credit cards count as good credit behaviour. On the contrary, closing an old credit card account could work against you. If you keep your old credit card that has a good repayment track record, you can enhance your CIBIL score, as the “age of credit” has a positive influence on your CIBIL score. Besides, you can improve your overall credit utilisation as well.

5. Keep a Regular Check on your CIBIL Score

CIBIL is India’s largest credit bureau. Thus, the CIBIL score it assigns based on your credit handling is considered as a measure of your creditworthiness. However, because of the vast amount of data exchanged between banks and CIBIL, it is possible for some errors and discrepancies to enter your CIBIL report. These errors can be anything from mistaken identity to a loan account that remains erroneously open on your CIBIL report, bringing down your overall CIBIL score.

Also read: Important things to know about CIBIL score

If you don’t check these errors out on time, they can bring your CIBIL score down without your knowledge. It is thus prudent to keep a periodic check on your CIBIL report to ensure that such errors and discrepancies do not enter your CIBIL report. Timely spotting of errors, if any, allows to raise a “dispute” with CIBIL following which it follows up with the concerned lender and finally rectifies the mistake on your CIBIL report.
Depending upon the nature of the dispute, the rectification of such errors can take anything between 7 days to a month. If it clashes with the time you have applied for a loan, your loan application may be rejected because of a low CIBIL score. Thus, it is better to ensure that your CIBIL report is error-free before you make any loan application.

With a good CIBIL score, you can opt for a range of customisable loans offered by Bajaj Finserv to suit your financial needs.