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Steps To Improve Your CIBIL Score

Disciplined credit management is required to maintain a good CIBIL score. Though your CIBIL score will not improve overnight, there are certain steps you may do to improve your credit score. Improving your CIBIL score can take anywhere from 6 months to a year.

The following are some of the steps you can take to increase your credit score:

Timely Repayments:- To keep a decent credit score, make sure to pay your loan EMIs and credit card bills on time. Regular EMIs demonstrate to the bank that you are responsible and help you enhance your CIBIL score.

Loan Types:- Having a good mix of secured and unsecured loans can help you enhance your credit score. Taking out just unsecured loans could make you appear to be a high-risk borrower.

Maintain a low debt-to-income ratio:- Although your loan repayments will reduce the amount owed over time, it is also recommended that you do not exceed your credit card limit too frequently, as this will reflect poorly on your creditworthiness.

Do not apply for various Credit Cards at the same time:- Credit cards might be appealing since they are a convenient way to get cash quickly, but managing too many credit cards can be difficult at times, and missing even a single EMI will harm your credit score.

Maintaining Old Accounts:- Having an old debt on your credit report and paying its EMIs on a regular basis presents a positive image of your trustworthiness and can help you boost your credit score. 

Benefits of a High CIBIL Score

Now that you know how to maintain a good CIBIL Score, here are some of the benefits that come along with a high CIBIL Score.

    • Low interest rates and Reduced Credit card Charges:- If your credit score is good, you will nearly always be able to get the best interest rates and pay lower finance costs on credit card balances and loans. You will be able to pay off your debt faster if you pay less interest.
  • Easy Credit Card and Loan approvals:- When you have a high credit score, your chances of receiving credit improve. Overall, you may apply for a loan or a credit card without fear of it being denied. This is because banks consider you creditworthy for the loan, if you have a good CIBIL score and therefore it is most likely that they would approve your loan or credit card application. 
  • Provides you more Bargaining Power:- You can further negotiate the offered interest rates on credit cards and loans if you have a good credit score. However, if you have a low CIBIL score then the bank would charge a hefty rate of interest on your loan application. With a low CIBIL score you would not be able to further negotiate the terms with the bank. 

Easy Top-up:- You can easily apply for a top-up and raise the loan amount on an existing loan because the banks will evaluate your credit score for the same and will consider it to easily add some money to the existing loan amount.

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