How do you increase your CIBIL score?

Work Advice
21 Oct 2022

A CIBIL score is a three-digit numeral that is a summary of your credit history. This CIBIL score is calculated using a person’s credit history found in the CIBIL report, which is also called the Credit Information Report.

This is a person’s credit history regarding their payments across various loan types and credit institutions in a given time period. This score, however, does not contain any additional details such as your savings, investments, or even fixed deposits.

A CIBIL score is a lender’s basic parameter in issuing an individual with a loan. It is mandated by the Reserve Bank of India that all banks should check the CIBIL score of every loan or credit card application before or during evaluation.

According to your credit usage, lenders use this information like a report card, where they consider your past credit behavior along with a person’s present credit action to determine your intent in repaying the credit amount in the future.

As mentioned, the CIBIL score functions like a credit card and will range between 300 and 900. The more this score is, the better are your chances are in scoring better loan deals.

Here are a few ways with which an individual can improve their credit limit fast.

Clear your balances

The first and most important thing to do would be to clear out any additional credit card balance that you might have. Always try to spend within a limit that you can repay within the billing date. This includes all unpaid dues on loans, unpaid dues on your credit cards as well. Have a conversation with your bank and try to close any extra loan account by finishing your dues.

These unpaid dues or balances with large numbers pull your CIBIL score down. However, if you do manage to pay off these debts, it will display rather well against your score. If you cannot manage a large number of credit cards, it is always better to keep less than two, since it would be easier to manage and keep track of.

Dispute errors (if any)

If you happen to find any error of transactions in your CIBIL report or if you disagree with a particular transaction from the vendor’s side, dispute these errors on the CIBIL website immediately.

It is mandatory for any financial institution to take these disputes seriously and respond in 30 days. After the error is rectified, it will show positively against your score. Also, do not, in any case, apply for new credit cards if there are errors pending in your report.

Manage your cards

It is a myth that states older credit cards that are not in use must be discarded. This myth is derived from the lack of knowledge on how this old credit card reflects against your CIBIL score. The truth is, a good credit card account that has been well-managed and wherein the dues are paid on time, is a wonder to your score.

These old credit cards not only provide longevity to your score but is something lenders prefer in candidates applying for a loan. If you possess a good account, then our suggestion is to not close it.

Pay the dues on time

Having a credit card is always a good option; especially, when you are intending on making a large purchase like a house or a car. However, if you have any unpaid dues when intending on making this big purchase, it is better to clear them on time.

Paying your credit card bills on time and paying off the EMIs correctly reflect rather well, and this is one of the most important factors that go into determining your credit score in the first place. A low CIBIL score can come in the way of you making this big purchase, despite having savings, since this score is the bar that lenders use in providing loans.

Keep in check your credit utilization

There are some purchases that you do not need to make on your credit card. Ensure that you keep your credit utilization ratio around 30 percent or lesser. By keeping your balances every month within a certain range, your CIBIL score will also improve.

Increase your credit limit

It is a myth that states that a large credit limit means uncharacteristic expenditure. A large credit limit does not mean you get a chance to live your life and spend reasonlessly. This large limit has several good things to keep a note of if you successfully manage your credit.

A large credit limit only means that you have a large credit limit at your disposal, and if you keep your expenses low, it will reflect well against your CIBIL score. However, never spend more than what you can repay as that can have drastic consequences against your score as well.

Get your hands on a secured card

If by any chance, you’ve got a bad CIBIL score and you cannot get a credit card, then you should try getting your hands on a secured credit card. Banks such as ICICI, CitiBank, SBI, Axis bank, etc., provide secured credit cards against a fixed deposit of a certain nominal amount. If you repay your balances on time, it will give your CIBIL score a boost.

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