How to Increase the CIBIL ScoreNowadays, with online loan processing, people can borrow loans easily or depend on credit cards to achieve their financial goals and aspirations faster. Therefore, to avoid fraudulent activities, financial institutions and loan providers gauge the borrower’s repayment habits. The borrower’s financial history is easily reflected through the acquired CIBIL score. A good CIBIL score ranges from 400 to 900. Those falling in this slot get a benefit of low-interest rates while those with not so good credit score can face difficulties in a loan approval. Hence, it is advisable to pay your dues on time to build a good credit score.
A CIBIL score is the reflection of your credit history. CIBIL is one of the four credit agencies in India that generates reports based on your credit score. It is mandatory to verify the CIBIL score for all types of loans - home loans, personal loans, credit card loansetc. Those with a low CIBIL score can improve their score gradually with the timely payment of EMIs, increasing the credit limit and keeping track of the credit report.
Ways to Improve your CIBIL Score
Your CIBIL score proves to be vital in defining whether your loan application will be approved or not. For a personal loan, the CIBIL score should be on the higher side. Incase your credit score is low, it can be modified and improved with some changes in financial habits:
- Timely Repayment of Dues: Paying outstanding debts of credit cards or EMIs on time will increase your CIBIL score. Getting into the pattern of paying only the minimum dues will help in preventing delayed payments and extra charges. Therefore, repaying dues will prevent interest from mounting up and increasing your credit score in the long run.
- Check your Credit Report: Keep an eye on your credit score for discrepancies and errors. The information recorded in the credit report decides the level of credit score. Sometimes the report could contain errors. If you notice any negative information mentioned in the credit report, approach the lenderand the CIBIL to get the report corrected.
- Prioritize Old Debt: Repay your old debts before applying for new loans. The interest and number of loans will keep piling up that will directly affect the credit score.
- Make Automated EMI Payments: Setting an auto-debit option for EMI deduction every month is a smart thing to do. There is no hassle of manually paying the EMIs as the amount will be automatically deducted on the set date. It will zero down the scope of missing the EMIs or causing any delays.
- Maintain a Healthy Credit Mix: Plan your borrowings smartly with a mix of secured and unsecured loans that can be used for long and short tenure as per your budget and ability to repay. Avoid applying for multiple loans or keeping more than one credit card.
- Avoid Joint applicants: This kind of situation can bring down your credit score.If the joint applicanthas not paid the dues on time,it will affect the CIBIL score of the second applicant too.Go for independent loans for maximum benefits.
Hence, a good CIBIL score indicates that the applicant follows a disciplined repayment and spending habit. Financial organizations will approve loans for those applicants who maintain a good CIBIL score.
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