Top 10 Calculative Ways to Improve Your CIBIL / Credit Score
It is no more a hidden fact that what crucial role CIBIL plays in an individual’s financial journey. A healthy score not only helps in a faster credit card or loan approval but also makes you eligible for privileges such as low-interest rates, minimal charges, flexible repayment tenure and maximum loan amount. In case your CIBIL score is poor or low, lenders won’t entertain such borrowers as far as approval is concerned, which is surely a big concern. And, if you are also going through the same situation, hence might have faced credit card or loan rejections, you must have one common question in mind, i.e. How Can I Improve CIBIL Score?
A credit score of above 700 out of 900 is considered to be a good CIBIL score. This three-digit numeric summary shows the creditworthiness of an individual and presents his financial journey in front of the lenders. A score less than that is not pleasant and would be risky for the lenders to approve loan/credit card application So, now that you know what is meaning of good credit score. There are various ways to improve your CIBIL score.
Top 10 Ways to Improve Your CIBIL /Credit Score
1. Always Pay Your EMIs/ Dues On or Before Time: Never skip a loan EMI or credit card payment. Be organized and make sure to always pay attention towards loan/credit card repayment. Afterall, Timely Payments will improve CIBIL Score and make you reliable in front of the lenders for future approvals. With a fair and no-default repayment record, your credit profile will witness a boost, hence no more rejections.
A Tip: If keeping a record of timely payments/ dues is a tedious task for you, opt for an Auto-debit Payment Option. This facility is a big boon for those who have difficulty in keeping a track of their EMI Payment for loan or credit card dues. Opt for this facility to see a drastic improvement in your credit score.
2. Pay Dues in Full: Most fall prey to the lucrative offer of minimum due offered by many credit card companies without seeing the broader picture. When you pay the minimum due, the only exemption that you get is late payment charges. That’s Right! The interest and the taxes will add to the next billing cycle, thus no escapism here. Opting for a minimum due might be easy on your pocket but it puts a heavy load on your CIBIL. Yes, your credit score goes down if you follow this practice. Thus, advisable to pay all your dues in full swing regularly to uplift your CIBIL.
3. Keep Your Credit Limit/ Utilization in Check: Its better to keep a lid on your credit utilization by setting the desired limit. Customize your credit limit and try to keep it low so that your credit utilization ratio will also decrease. Because the more you spend, the more you got trapped in a debt trap, and there is no coming back from that state.
Also, a higher limit utilization makes CIBIL perceive you as credit hungry, thus it can hamper your score. So keeping your credit utilization ratio below 30% to 40% of the actual limit offered by the borrower would be advisable. Doing so, will help in controlling your spending desires/needs and make you a smart and calculative spender thus keep your cibil on the right track.
4. Say NO to New Loan/Credit Card: As you are already on a recovery mode, it’s better to avoid taking a new loan or credit card, until and unless there is an emergency. Your credit hunger will put you in a tight spot as you are already in trouble. It is advisable to use your savings to meet your urgent needs. And, avoid taking a fresh loan/credit card.
5. Avoid Sending Too Many Loan Queries: If you want to see your CIBIL back on track, do not send multiple loan/credit card queries. Yes, doing so will not only show your eagerness for the credit but as your CIBIL is already in a bad state, too many rejections will further damage your score. Your every financial activity gets monitored and the same will reflect in your CIBIL Report. So, try not to do the same and let your score be in a happy mood again.
6. Stop Checking Your CIBIL Score Too Often: Nothing will change and change for the better if you check the score quite regularly. Instead, too many CIBIL enquiries can pull down the score faster. Do not check your CIBIL too often and maintain a good gap of 9 months so that your CIBIL can heal properly. Utilize this time in rebuilding your score by taking the calculative decisions and following some simple practices.
Quick Tip: Check your CIBIL Report for once thoroughly, just to know if there are any discrepancies in your loan/credit card account. Do not forget to check your credentials such as your Name, Date of Birth(DOB), e-mail ID or PAN Number also. And in case of any error, report it to CIBIL immediately. This could boost your CIBIL score, if it has fallen due to discrepancy.
7. Opt for a Longer Loan Tenure: If you have an already running loan, by looking at the present condition of your CIBIL, opting for a longer tenure will help in uplifting your CIBIL score. Well, the longer repayment history/schedule you have and pay your EMIs on time, the better it is for your CIBIL. A good and long credit history would give your CIBIL the required time to be new and improved.
8. Consolidate Your Loan into One: In the case of multiple loans running, it is advisable to consolidate the same into one. Doing so, will help you in maintaining a single loan only and reduce the chances of default. This will not only reduce your burden but bring more focus so that you can concentrate on the timely repayments of one loan. Thus, your CIBIL Score will start showing the improvements.
9. Maintain a Healthy Credit Mix: A healthy mix of credits, both secure and unsecured loans, of a long and short tenure will not only do magic for your CIBIL but also give a diversified portfolio to you. If you have too many unsecured loans(personal loan, credit card), it can be viewed negatively. Thus, try to find the perfect balance of secured loans (home loan, car loan) as well as unsecured loans and be a helping hand to uplift your CIBIL score.
10. Pay Off your Credit Card Balance via Personal Loan: Pay a bigger portion of your credit card debt with a personal loan. It’s better to opt for this unsecured loan as it comes at a lower interest rate as compared to 30%-45% of credit card loans. The bigger chunk of your credit card balance will be paid off instantly with a personal loan and it also makes you enjoy pocket-friendly EMIs, the benefit of the attractive interest rate. Doing so also allows you to show a good repayment track if you timely pay your loan EMIs.
Quick Tip: As the current figures of your CIBIL is not good, thus it would be difficult to get approval for Personal loan. Then what to do in such a case? Well, you can use your savings(if any) for the same purpose. Clear the bigger portion of credit card dues/balance for once and all and reduce your burden while also improving your score.
If you are still not convinced with the points above and a debt settlement is on your mind, you are advised to read the blog below.
Do Not Go for Complete Debt Settlement: A Big NO
In case you are thinking to get rid of your debt, a big NO to debt settlement, except you opt for part payment. You read that right. Let’s have more clarity on it below.
Prepayment: If you choose to close your loan before its due/set tenure, you are actually doing wrong for your CIBIL Score. A complete debt settlement will not only close the road for repayment history to show but also shows your inability to repay the debt. Try not to opt for this and let your credit history be shown with a good repayment record, which will improve your score gradually.
Part Payment: A part payment will be of great use here. Using your savings to pay a major portion of your debt would not only reduce your burden but will build a good portfolio in front of lenders. Doing so will show your active participation and now that you have easy EMIs, timely repayment of the loan will also there. Overall, your credit score will rise in the process.