How to Improve CIBIL Score?

Credit score is one of the most important elements for lenders in order to determine how creditworthy you are. CIBIL is a credit bureau in India, one of four, that generates comprehensive reports based on your credit score. The reports comprise various elements like your credit history, repayment history, and more. Lenders across all domains use the CIBIL score to determine risk-based pricing for the applicants and the loans they wish to apply for. Lower the risk, lower the interest rates.

CIBIL score is a three-digit number that lies between 300 to 900, with 900 being the absolute best score. Usually, lenders consider any CIBIL score above 750 to be ideal.

Therefore, before getting into how to improve CIBIL score immediately, let us take a look at how the CIBIL score is calculated first.

Here are a few effective tips on how to increase CIBIL score quickly and efficiently:

Increase CIBIL Score

Maintain Discipline with Credit

Your outstanding debt and repayment history can significantly affect your CIBIL score. Repay your EMIs on time, and maintain a healthy relationship with your vendor. Defaulting on your EMIs can reduce your CIBIL score, and can cause some troubles the next time you try to take a loan or credit inquiry

Mix it up With Your Credit Limit

The credit utilization ratio in your portfolio is another factor that can help you improve your CIBIL score. Look at it this way – If you can manage to stay within the credit allotted limits and restrict your credit usage, your CIBIL scores will go up fast. Get in touch with your vendor/s, and try to mix your credit usage up in order to customize it according to your credit limits.

Diversify Your Credit Types

If you have never taken a loan or credit, then you will have a low CIBIL score. Having a mixture of credit types can have a positive impact on your CIBIL score almost immediately. Having both secured and unsecured loans is a good idea to get things started. Additionally, ensure that you take these loans across different tenure to diversify your credit types even further. This sends a positive signal to CIBIL while they analyze your repayment history, and end up improving your CIBIL score.

Maintain Records

Maintain the records of all the previous loans you have taken, their tenures, and their repayment history. Avoid closing down any bank accounts which have a good repayment history as they can come in handy while increasing your CIBIL score. This will keep things stable for you as CIBIL assesses all your bank accounts in order to calculate your CIBIL score.

What Can Affect Your CIBIL Score?

There are 4 factors considered by CIBIL while calculating your CIBIL credit score:

  • Repayment History

Repayment history accounts for about 35% of your CIBIL score. Missing out on EMIs or defaulting on your repayment can reduce your CIBIL score.

  • Repayment Duration and Type of Credit

Only taking one type of credit can also affect your CIBIL score – 10% to be precise. Make sure to keep altering between unsecured and secured loans for your credits.

improve cibil score
  • Existing Debt

If you use too much credit or have existing debt, it will negatively affect your CIBIL score. Existing debt coupled with credit utilization accounts for 30% of your CIBIL credit score.

  • Credit Inquiries

If you take many loans or credit inquiries in quick succession, CIBIL will assume that you are unable to survive without a loan and are credit-hungry, which can reduce your CIBIL score.

Conclusion

Finnable is an instant personal loan app that can help you keep track of all your credit dues and maintain a solid repayment history. You can conveniently avail personal loan or travel loans of up to INR 10 lacs instantly. Moreover, the app keeps you informed of all your due dates and offers seamless answers to your credit inquiries.

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