10 Dec 10 Must-Try Ways to Improve your Bad CIBIL Score
Do you have a low CIBIL score? Fret not. We show you ten different ways in which you can improvise the score over time. However, before proceeding, let us see what a good score is, and its benefits.
What is considered a good credit score?
TransUnion CIBIL is one of the popular credit bureaus generating credit scores in India. This CIBIL score can range anywhere between 300 and 900.
A score closer to 900 is interpreted as good or excellent, while anything between 300 and 549 is deemed to be poor by financial institutions. Score from 550 to 700 is considered fair. A score belonging to a poor or fair category can be improved if appropriate methods are followed.
Advantages of Good CIBIL Score:
- Cards with great benefits and rewards
- Higher credit card limit
- Easily avail pre-approved loans
- Quick approval on credit applications
- Get loans with longer-term
- Gain negotiation power
- Discount on loan handling and other fees
Do you wish to obtain these benefits? But, do you have a poor CIBIL score? Read on to know how to improvise it.
1. Be Disciplined with the Payments
Repaying your outstanding debt on time will have a significant influence on your CIBIL score. So, be disciplined when it comes to paying EMIs. If in case you delay the payment, you have to pay the penalty and also won’t be able to achieve a good credit score. A simple step is to set a reminder for EMI payments, so that you don’t miss the date.
2. Customize your Limits
Your credit usage ratio will also have a significant impact on your CIBIL score. Reaching the limit will lower your credit score. So, to improve your score, start restricting the credit utilization as per the assigned limit. You can contact the lender to customize your credit limit based on your expenditures.
3. Maintain Older Credit Cards
Continue to maintain all your old credit cards as long as you can pay your bills fully on time. With this approach, you can form a strong and lengthy credit history, which gradually increases your score and helps you maintain a good CIBIL score throughout.
4. Avoid Multiple Debts at a Time
Take only a minimal number of loans in a fixed period. It’s a good practice to take a loan only after you repay the previous one so that it keeps your CIBIL score from colliding. Applying for several loans at once will prove that you are running out of cash, and thereby lowers your CIBIL score further.
5. Choose a Longer Tenor
Opt for a longer tenor for repayment while borrowing a loan. This ensures a lower EMI so that you can make payments on time without any hassles. Your CIBIL score will improve if you don’t delay, default, or skip paying EMIs.
6. Choose Different Credit Forms
While applying for funds, ensure that you borrow a healthy mix of credits, including both secure and unsecure loans, with a long and short tenor. It builds a robust CIBIL score and helps you access low-interest rates for your personal loans in the future.
7. Don’t Apply for Credit if Rejected
If you have been applying for a credit card or a loan continuously, even after it’s been rejected, it impacts your CIBIL score negatively. All such information will be recorded in your credit report, and the other banks will be able to see your previous rejection and may reject your current application based on it. The subtle tactic is not to apply again and wait until the score improves.
8. Don’t Opt for Joint Applicants
Sometimes, being a joint applicant makes you suffer even if you are not at fault. That is, if you are the joint applicant for a loan taken by someone else, and if they have defaulted on payments, you too will be at a loss as it will reflect in your credit report. Hence avoid being a joint applicant or ensure that the payments are made on time.
9. Maintain Lower Frequency of Applications
Avoid applying for credit cards and loans many times as the bank will ask CIBIL for your credit report every time. This inquiry will be recorded in the credit report and can lower the score after each request of your report. It shows you are credit hungry even if you are capable of repaying the amount on time.
10. Check Your CIBIL Report
There are certain cases where CIBIL makes mistakes while updating the records. This brings down your score, although you are not to blame. To avoid such unnecessary problems, check your CIBIL report regularly. This helps you recognize the errors and correct them by submitting a CIBIL Dispute Resolution Form online. And, thereby, your CIBIL score will improve.
Build up your credit score with these smart moves. Practice it often and don’t forget to keep a tab on your EMIs and credit card payments.