5 Simple Ways to Improve Your CIBIL Score

When you think of applying for a loan, you credit information report (CIR) is among the first things that get considered for processing your application.

A low credit score can deeply hamper your chances of getting your loan approved, hence it becomes important to keep your credit score and credit history positive so that your chances of taking financial assistance in the time of need won’t get sabotaged. 

Thinking that improving your CIBIL score is a long and cumbersome task you may make you find the idea of reaching out to a credit repair company lucrative, but trust us, that is not something you should be looking at as solution to improve your CIBIL score. First of all, CIBIL is not associated with any kind of credit repair company and second, why pay a huge money to some third party when you can do this by taking a few wise steps on your own. 

If you are planning to apply for a loan or a credit card then you need to start working on improving your credit score soon. So, the first and foremost thing that you should concentrate on improving is your credit report. Any kind of disparity in the same can lead to rejection of loan application, which further reduces your chances to get the loan or credit card. CIBIL score will not only indicate your credit score but will also have your payment history, which implies you need to discipline your spending and payment habits as well. 

While being disciplined with payment schedules is one, there are other things that you can do bring significant improvements to your CIBIL score that include the following:

Checking Your CIBIL Score and Report from Time to Time

Keeping a check on your credit score and credit report can help in eliminating the chances of any false records or wrong information in your credit account. You can sign up with CIBIL to get monthly updated credit report or you can get your credit report from any other agency that provides credit report for an individual and an organization. Websites like Paisabazaar.com also provide monthly credit report updates, in collaboration with credit report agencies, without any additional cost. Creating an account with any such website can be useful in maintaining a track of your credit report. 

However, only getting the monthly credit report will not solve the purpose. You must check for things that are bringing your credit score down. Sometimes it might have caused because of administrative issues or because of an unpaid EMI that you completely forgot about month after month. No matter what the reason is, such issues can bring down your credit score significantly. 

Not Delaying Your Monthly Payments

Whether you are paying EMI for loan or you have credit cards, paying the dues on monthly and timely basis can bring instant improvements to your credit report and history. Any kind of delay in such payments directly affects the credit report as the CIBIL score tends to change on daily basis in some cases. The track record of your credit card and loan repayments can make up to one third of your CIBIL score, thus paying them on time will only help in building a good credit score. 

Never ever think of delaying or skipping your EMI and card dues as it may cost your dearly later. Not only you should make the payments in timely manner, but should also ensure to do so at least 4-5 days before the due date to keep your credit score in green zone. 

Put a Limit on Your Credit Usage

Your credit card can be a prime factor in lowering your credit scores as too much dependency on it can bring negative results. Thus, you must discipline your credit card usage and refrain from using the entire limit of your credit card. You must not spend more than 50% of your credit card limit and should stick to this until your credit score reaches 750+ status. 

Once you spend the entire credit limit of your credit card it becomes clear that your spending habits are not disciplined and you do not possess enough finances to pay EMIs on time. Therefore, changing your credit card spending habits and improving your purchase behavior can significantly increase your CIBIL score. 

To avoid such a situation it is advisable to make cash purchases wherever possible as doing so will limit you from going over your pocket. 

Avoid Applying for Too Many Cards and Loans Together

Have been sending off too many inquiries for credit cards and loans? Stop doing so immediately as it shows your desperation for money thus bringing negative impact to your credit score. It is advisable not to apply for loans at different banks and NBFCs’ together as it will get revealed immediately in your credit report. Such kind of information in your credit report gives lender an indication that you are desperately looking for finances and may not be in a position to repay the same in timely manner. 

As too many inquiries and applications show your desperation this may let lenders to take advantage of your situation and lure you into a high interest rate trap. Neither of the situations is good for your credit score. As, in first case getting the money immediately will put you in a tight repayment spot which you may not be able to honor and the high interest rate will only toughen things further. 

Thus, it is better to work on your financial situation wisely and not taking any sentimental decision which may make tackling finances difficult in the long run. 

Avoid Being a Guarantor 

When you are already dealing with your low CIBIL score there is no point taking responsibility of someone else’s debt. If you become a guarantor for some then the onus of their repayment falls on your credit report as well. In case they default on the loan their action will also impact your credit score. Therefore, it is better to focus on improving your own CIBIL score first than being a guarantor for someone else. 

No matter what the scenario is, it takes nearly 4 to 12 months for your CIBIL score reflect changes, thus there is no point in taking hasty decisions for score improvement. Instead you can begin disciplined expenses and payments that will gradually improve your credit score. You can also use online finance management tools to regulate your finances efficiently if you have a record of being reckless with your money in the past.