A CIBIL score is a three-digit score that indicates the credit score of an individual or a business alike. Having a good CIBIL score is essential because a good score is directly proportional to one’s creditworthiness. In other words, the higher your CIBIL score is, the better your chances of having a loan approved easily and quickly. But how do you ensure a good CIBIL score and what are the ways to improve a CIBIL score? Let’s find out!

A CIBIL score defines one’s loan eligibility and is generated by one of the four credit bureaus of India called CIBIL. Most, if not all, lenders – big or small- consider the CIBIL score as one of the most important factors to decide one’s creditworthiness. The score is calculated after an in-depth analysis of ones’ financial criteria, like old loan repayment history, length of payment history, applications for credit, the debt amount, credit mix, etc. The better your score, the better your chances of getting a loan are.

It must also be noted, however, that though you may be able to get yourself a loan with a bad CIBIL score (a score below 600), the interest rate on your loan will be charged higher than that for a person with a good CIBIL score. This is because offering loans to a person or a business with a bad CIBIL score is considered a ‘risk’ by the bank.

Now, after knowing the tremendous impact of a CIBIL score on one’s future in terms of loan approvals, how does one improve CIBIL score? Or how do we improve CIBIL scores quickly?

Before discussing the ways to improve the CIBIL score, we must first understand what CIBIL score is? 

What is CIBIL Score? 

CIBIL scores range between a minimum of 300 and a maximum of 900. Here’s how CIBIL scores are categorized: 

  • Good CIBIL score: 700-900 
  • Average CIBIL score: 550 to 700 
  • Poor CIBIL score: 300 to 549 

If you have a CIBIL score of less than 700, your chances of getting a loan approved hassle-free are generally lower than most. But it is not entirely impossible to up your game either!  

7 Smart Ways To Improve CIBIL Score Quicky & Effectively

As now you know what CIBIL score is, let’s explore 7 smart ways that will help you to improve your CIBIL score quickly and effectively.

1. Ensure Timely Re-Payments Of Outstanding Debts

Something as simple as just paying your personal loan EMIs, business loan EMIs or credit card bills in time is one of the easiest ways to maintain a healthy CIBIL score. A lot of times people tend to believe that paying off just the minimum amount can help assure a good CIBIL score but the reality is quite the opposite. When you pay just the due amount, all you are doing is avoiding a late fee charged to you. The following month, however, you will not only have to repay the outstanding expenses of the previous month but also a huge additional interest plus any expenses you would have made in the new month.

A couple of months into this practice and your EMI or credit card bill will start looking like a mountain of debt, making it more difficult for you to repay, and hence, outstanding debts will result in a bad CIBIL score.

2. Never Fully Utilize Your Credit

Another practice to follow in terms of credit card usage that can help improve CIBIL score is to limit the utilization of your credit amount. Using more than 30% of your offered credit amount is indicated as “high credit utilization” and hence, bad creditworthiness. This means that if you have a credit limit of Rs. 1,00,000, you should try and use only 30% i.e, 30,000 of the total 1 lakh limit each month.

If you are somebody who makes all payments via a credit card and repays at the end of the month before a new salary hits the bank, you’d probably know if you cannot do it by just using 30% of your credit limit. In that case, you may reach out to your bank and sign up for a higher credit limit. Doing so will improve your CIBIL score.

3. Avoid Applying For Multiple Debts Or Credit Cards

While having multiple debts or credit cards as per your needs may seem like a convenient and good option, especially in case of an emergency, it must be understood that you’d most likely end up using all the cards and that will just translate to more debt. And what does high outstanding debt mean? A bad CIBIL score! Even having a lot of credit from different banks, despite your less spending, can negatively affect your CIBIL score.

The only way you can improve your CIBIL score while having multiple cards is by ensuring you can repay all amounts on time.

Want to know how CIBIL score is important for availing loan in detail? Here’s a guide that can help!

4. Choose Varied Credit Options as Per Your Needs

When we hear the word credit, the first thing that comes to mind is credit cards. Credit, however, is not just limited to cards and should not be looked at from only one perspective. It is recommended to opt for different types of credits that include a mix of long-term loans and short-term loans as well as personal and secured loans, to improve your credit history.

It must be noted that not having any credit history on you is also not a good idea as that indicates that you do not have experience in handling loans.

5. Maintain Old Debts On Your Records

Scraping off fully repaid debts off your records may feel like a great feeling but it is not actually a very good idea. It is suggested that you keep the records of old good debts in your accounts as that’d reflect good past credit behavior, a good CIBIL score, and hence, easy loan approvals in the future.

Another common hack to improve the CIBIL score used by businesses is to keep those good accounts active that reflect a solid repayment history as this gives a prolonged boost to the CIBIL score.

6. Avoid Suspicious Activities On Your Cards

Another important way to improve the CIBIL score is by avoiding lenders sniffing a suspicious activity on your loan profile. For example, you may want to apply for a house loan and your score may be less than 650 which significantly lowers your CIBIL score. Now, in an attempt to quickly increase your credit score, you may decide to suddenly resolve all credit. This will give the authorities a chance to doubt your credibility and give them a reason to dive deeper into your accounts.

Other risky activities include paying only the minimum due month on month, using cash advances on your credit card or revolving credit as all of this indicates stretched cash flow.

7. Avoid Applying for Multiple Loans

It is true that opting for multiple loans stretches one’s financial capability, however, at what cost does that capability come to you? More often than not, it is at the cost of not only multiple outstanding debts and high interests but also, a “hard inquiry” on your credit report. A hard inquiry, as you may already know, is an exhaustive analysis of one’s credit profile, requested by a potential lender, to understand the number of debts one has and also the CIBIL score.

Each hard inquiry made on an individual or a business lasts for at least 2 years and hence, too many loan applications will also mean too many hard inquiries, leading to a low CIBIL score. Imagine having your loan application rejected due to multiple inquiries on your score? Does not sound too great, right?

Bottom Line – Take Loan Only After Carefully Considering All The Aspects

The better your repayment history & money management, the better your CIBIL score. Hence, the best way to improve your CIBIL score is to ensure that you do not have too many outstanding debts and that you have a limited number of varied credit lines in your name – making sure you can repay each of them month-on-month.

While learning ways to improve your credit score, it only makes sense to in fact keep a check on your credit report. This is not only because it will keep you in check with your reality but also because it eliminates the chances of any errors in your credit report or a faulty credit report.

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How to check my CIBIL score? 

The most viable way of getting a CIBIL score is by visiting CIBIL’s official website. All credit bureaus are legally bound to offer one free credit report a year. Apart from that, you can also check your CIBIL score online at marketplaces and on bank websites. However, such reports may not be 100% accurate and may also delay updating the report or updating important details in the report

What is a CIBIL score? 

A CIBIL score is a three-digit score that indicates the credibility or the creditworthiness of an individual or a business. The higher the score, the better the chances of getting a loan fast and hassle-free at low-interest rates.

How can I increase my CIBIL score quickly

There is no way to quickly improve your CIBIL score. It typically takes 6-12 months to improve a CIBIL score, depending on how bad the number is. Some methods like timely repayments of old debts, limited credit utilization, or resolved errors or disputes in your credit report are some ways that can help speed up the process.

How much time will it take to improve my CIBIL score? 

It typically takes 6-12 months to improve the CIBIL score, depending on how bad the score is. In some cases, it can even take as much as 18 months.

How can I increase my CIBIL score to 800? 

It typically takes at least 6 months for an average CIBIL score to reach 800 marks. When applying for a loan, it is advised to try and make sure your credit score is 800 or above as that can help get quick and hassle-free loans at low-interest rates than someone with a bad score. Paying your dues on time, not having multiple cards and multiple credit lines, not fully utilizing all granted credit, and avoiding multiple loan applications in a short span of time can ensure a good CIBIL score.