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How to Improve Your CIBIL Score?

How to Improve Your CIBIL Score?

Your CIBIL score represents your creditworthiness. A high score increases your chances of getting approved for loans or credit cards and allows you to enjoy lower interest rates and better terms. Alternatively, a low score can weaken your financial prospects.

Improving your credit score is a slow process, but with discipline and the right approach, you can improve your creditworthiness and boost your score. In this blog, we’ll dive into the nitty gritty of a high CIBIL score and how you can achieve it.

Tips to improve your CIBIL score

Here are a few simple and practical ways in which you can enhance your CIBIL score:

#1 Review your credit report

CIBIL gives you a free credit report annually. Get this copy and carefully review it for mistakes or discrepancies, such as incorrect personal information, loan amounts, or payment history. If you find any errors, inform CIBIL immediately for rectification.

#2 Pay bills on time

Your payment history plays a vital role in determining your CIBIL score. To maintain a healthy score, pay all your bills on time, including credit card bills and loan EMIs. An easy way to do this is by setting up automated payments or payment reminders to avoid missing deadlines. If you have any unpaid bills, pay them on priority and maintain a regular payment schedule going forward.

#3 Decrease your credit utilisation ratio

The credit utilisation ratio is the amount of credit you’ve used compared to the available credit. It can impact your CIBIL score considerably. Therefore, it’s best to keep this ratio below 30%. For example, if your available credit is Rs. 1 lakh, don’t spend more than Rs. 30,000.

Additionally, try paying your credit card bills in full each month and avoid maxing out your cards. If needed, you can also request a credit limit increase or a balance transfer to consolidate high-interest debt.

#4 Diversify your credit portfolio

A diverse credit portfolio consists of both secured and unsecured credit. For example, home loans, personal loans, credit cards, etc. This can positively impact your CIBIL score as lenders prefer borrowers who can responsibly handle different types of credit.

#5 Maintain old credit accounts

Avoid closing your old credit accounts, especially those with a positive payment record. It can harm your CIBIL score by decreasing the length of your overall credit history. Instead, keep them open and use them periodically to maintain a healthy credit history.

#6 Limit credit inquiries

The lender looks up your credit report every time you apply for a loan or credit card. Multiple credit inquiries within a short duration can negatively impact your CIBIL score as it portrays you as a high-risk borrower. To prevent this, only apply for credit when necessary and keep significant periods between new credit applications.

The Bottom Line

By managing your credit smartly and following these tips, you will start noticing improvements in your credit score in no time.

To check your credit score for free, you can visit the Tata Capital Moneyfy website. All you need to do is enter information like your name, gender, email id, phone number, address, etc. and get your CIBIL report instantly.

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