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10 Guaranteed Ways To Improve Your CIBIL Score

10 Guaranteed Ways To Improve Your CIBIL Score Now
Written by CreditSmart

 Raise, Boost, Improve Your CIBIL Score Now

Have you been ignoring your CIBIL score out of fear? Have you developed bad money habits that might be impacting your future ability to get loans? It’s time to start exercising financial discipline and improve your CIBIL score.

Your credit score is an important element when you apply for a new credit card or take a loan. As you know, these scores are generated depending on various factors, including your credit history, payment patterns, your past credit details, etc. All these factors put into an algorithm determine your CIBIL score. A low CIBIL score represents low creditworthiness and a high credit score indicates strong creditworthiness. Got it? Good.

Obviously a low score will make it difficult to get loans, as lenders will see you as a risky borrower and will not pass your loan application. A good CIBIL score is the one that is above 750 out of 900. And, a poor credit score is anything below 550. And, if you have a credit score that is below 750, then you must surely improve it. How? Just read on to find out how you can improve your credit scores.

1. Use your credit wisely

You must use your credit wisely. This means that you must not use your credit card till its full limit nor use the most of your available credit. Use only a small percent of your credit cards’ credit limit, the lower the better. People with excellent scores usually don’t use more than 30% of their available credit. This will show that you have spent your money responsibly not recklessly. However, do not choose to not use your credit card at all, as this will hurt your credit score by not displaying any credit history.

2. Do not apply for new credit

If your CIBIL score is low, then steer clear of loans or credit cards till your score improves. This is because when you apply for a credit card or take a loan, the credit card issuer or lender will enquire about your CIBIL score, which in turn will harm your score. The more enquires there are on your report, the more lower your CIBIL score will be. Therefore, do not take a loan for sometime or yourself check your CIBIL score, which will be considered as a ‘soft inquiry.’

3. Balance your debt portfolio

If most of your debts comprise of unsecured debts, then discharge them as soon as possible. Where secured loans have a positive impact on your CIBIL scores, more unsecured debts show that you cannot generate sufficient disposable income. Therefore, keep minimum unsecured loans.

4. Improve your payment patterns on current debts

Make timely payments on your existing debts in order to rebuild your credit history. Make sure that all your outstanding balances are paid in full. You can also opt for automatic due deductions from your account, so that you do not have any outstanding balance in case you forget making payments. Eventually, this will improve your credit score.

5. Consolidate debt

If you have numerous debts, then you can opt for a consolidation loan through which you can combine all your debts and pay for them. This way you can easily track your loan payments and thus reduce the chances of missing your payments. Moreover, debt consolidation loans come at lower interest rates as compared to the interest rates of your current loans. Owing one institution money looks better on a CIBIL report than owing 4 institutions money.

6. Check your credit report for discrepancies

This is the easiest thing you can do, because if you do have an error on your report removing it will instantly raise you score. In order to ensure that your credit scores are recorded correctly and do not have any discrepancies, check your credit report through CIBIL at least once a year. And, if you find any incorrect information on it, you can get it corrected by approaching the said institution or bank.

7. Check your score frequently

Like we just said, obtain your credit report at least once year in order to check your CIBIL score and know where you stand. Preferably every 6 months.

8. Minimize your loan enquiries

Make sure that you do not take a loan for sometime as mentioned earlier and even if you do, keep it to a minimum. This is because the more providers you seek for taking up a loan, the more enquiries will be done on your CIBIL score, thus impacting your score negatively. It will show you’re looking for credit too frequently.

9. Maintain your credit utilization ratio

Credit utilization ratio is a comparison of your available credit and the credit that you use. You can maintain this by keeping more credit cards and using them wisely.

10. Timely repayments

Do not just repay your credit balances all at once. Instead repay them on time and improve your CIBIL scores. This is because if you pay off your card bills suddenly with a big amount of money, then your financial records will look unstable and thus reduce your CIBIL scores. On the other hand, repaying them on time will positively influence your scores.

Although, increasing your credit scores is not easy, it is very much within reach and very possible to do within a span of months. With concentrated efforts and enough financial discipline, you can easily score above 750 in your CIBIL report.

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