CIBIL Score: Steps to Improve Your Credit Score

Your credit score is a very important financial parameter that indicates your financial health and behaviour, based on which banks offer you a loan. 

Often due to ignorance and lack of awareness, some of your actions result in a drop in credit score that makes you less creditworthy. In this blog article, we will discuss ways to improve your CIBIL score fast. 

How Can I Improve My CIBIL Score Quickly

  • Check your credit report for errors and fix them
  • Pay outstanding debt
  • Decrease credit utilization rate
  • Limit hard enquires
  • Opt for a longer repayment tenure
  • Consolidate your debt
  • Plan your credit

Let’s check all the points in detail.

Check Your Credit Report

Your credit score is calculated based on the following four factors and each factor has its weightage on the score:

  • Payment History (30%)
  • Credit Dues (25%)
  • Credit Type and Duration (25%)
  • Other Factors (20%)

The process to calculate credit score is completely automated, but the chances of error remain, which can pull down your credit score. 

Therefore, you need to check your credit report at a regular interval that will help you to identify any errors. If there are any errors, you need to dispute them with CIBIL.

Also, it is a good practice to check your credit score and credit report regularly. It helps you to identify the areas where you need to work on to improve your credit score.

Pay Outstanding Debt

Don’t carry any outstanding debt like credit card due or loan amount for too long as it results in a drop in credit score. 

Ensure timely repayments and also avoid paying the minimum amount due on a credit card as it shows you have difficulty in making payments for short term debt. 

Decrease Credit Utilization Rate

Avoid utilizing the full credit limit, like using up the entire credit card limit at frequent intervals. It showcases your overdependence on credit money to meet short term financial requirements, indicating inefficient financial planning. 

It is advisable to keep your credit utilization rate below 30% to bring a positive impact on your CIBIL score. 

Limit Hard Enquires

Hard enquires means when your credit report is deeply scrutinized by your lender to determine your loan eligibility when you apply for a loan. It gets reflected on your credit report that a lender has accessed your credit report for scrutiny with details.

If there are multiple hard enquiries on your credit report in a short span, banks take it as an indication that you are facing financial difficulties and is desperately looking for credit. And, there might be a risk of default. 

Opt for Longer Repayment Tenure

Whenever you take a loan, opt for longer repayment tenure. This will keep your EMIs low and affordable so that you don’t face any difficulty in making timely repayments. 

Paying your EMIs on time helps to improve your credit score quickly and you will face less difficulty in obtaining a loan. 

Consolidate Your Debt

Consolidating your existing debts can help you in two ways. 

Firstly, you can lower the overall interest cost that will help you to pay the debt faster. Secondly, it provides a nice boost to your credit score since your credit utilization will be lower and the report recognizes that you closed other loan accounts earlier.

Plan Your Credit

It is very important to plan your credit as in most cases, the primary reason for poor credit score is people don’t plan their finances. 

Keep a safe balance between credit card dues, personal loans or any other loans you have. And, never cross the 30% debt to income ratio, as it will help you in paying your EMI timely and restrict you from over-borrowing. 

How Can I Check My CIBIL Score?

Following are the steps to check your CIBIL score online:

Step 1: Visit cibil.com/freecibilscore to check credit score online 

Step 2: Click here to get your free CIBIL Report & Score 

Step 3: Now, create your account and verify your identity

Step 4: After successful account creation and verification, click on “Go To Dashboard”

Step 5: You will be redirected to a webpage, where you can check your CIBIL credit score and report

Access to the free online credit score on the CIBIL website is given only once. To track your credit score at regular intervals, you need to subscribe to either a monthly, semi-annual or annual plan by paying a fee. 

What are the Benefits of Having a Good Credit Score?

A CIBIL score above 750 is called a good credit score. Some of the benefits of having a good credit score include:

  • Improves your loan eligibility
  • Quick processing of loan application
  • Can negotiate a discount on the rate of interest
  • Preferential pricing
  • Can request a higher spending limit on your credit card

Your credit score depends a lot on your financial behaviour and how well you manage your finances. Therefore, through better financial management, you can improve your credit score high and keep it in the preferred zone of lenders.

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