6 Tips to Increase your CIBIL Score and Become Loan-worthy

5paisa Research Team Date: 22 Sep, 2022 01:07 PM IST


Want to start your Investment Journey?



6 Tips to Increase your CIBIL Score and Become Loan-worthy

Before granting a loan or issuing a credit card, a bank will look into an applicant's CIBIL Score first. As a result, before applying for any loan, make sure your CIBIL Score is good. However, a person's CIBIL Score may be lowered if he or she is unable to return a loan on time owing to uncertainty or financial mismanagement.

This necessitates him re-establishing his CIBIL Score. Then you need to know how to increase your CIBIL Score right now if you're having the same issue as everyone else. Nobody likes to be in a situation where they are unsure.

The more responsible and attentive we seem, the better off we will be financial. A CIBIL Score is critical when applying for credit from banks or non-financial business corporations (NFBCs). You might have a clear idea of what is Sensex today, but still, be completely oblivious to your CIBIL score and this is where mistakes are made.

A person's creditworthiness is assessed using credit scores. When we have a poor CIBIL score, it makes it more difficult to get credit from the banks. So here are X tips that can help you in upping your CIBIL score as quickly as possible!

6 Effective Tips to Improve your CIBIL Score

1. Check your CIBIL Report Regularly and Spot Inaccuracies

If you're certain that you've maintained excellent credit behaviour by paying off all of your loans and credit card bills on time, getting a low CIBIL score may be a rude awakening. Look for errors on your CIBIL report if this is the case.

When lenders enter data into CIBIL, there may be certain errors that are sent back to them. For instance, your CIBIL report may still show a loan account as active despite the fact that you settled the loan in full more than six months ago.

You'll have to file a complaint with CIBIL if this happens. You should check your CIBIL report on a regular basis to make sure that all the information about you is recorded properly so that there are no inconsistencies.

2. Ensure Judicious Usage of Credit Cards

Everyone should have access to credit cards since they are useful in so many situations. It has so many advantages; it gives us adequate credit for our needs, rewards points, free coupons, and the confidence to travel without cash.

Use of your credit card should be limited, however, in order to prevent any problems with spending control. The 30 per cent guideline is advocated by some, while others recommend spending 50 per cent of your credit limit each month.

Go ahead and use 40% of your limit just to be on the safe side. Your CIBIL score may be improved by making excellent use of your credit card.

3. Tackle Credit Card Debt, If You Have Any

A high credit card debt has to be paid off right away and should be your first priority. This is the priciest credit, and having a high balance leads to defaults and late payments. As a consequence, your credit score will suffer.

This is a crucial initial step in maintaining and increasing your credit score in the future. If the large outstanding is due to an emergency, and you are unable to handle it, you have a few alternatives.

Reduce your spending and pay off the credit card first; next, obtain a loan that can be paid back over time to save money on interest; and last, ask for help from a family member or trusted friend to get over this hurdle if you need a short-term loan to help you get through it.

4. Ask for a Credit Limit Enhancement

Increasing your overall credit limit may seem counterintuitive, but if your credit usage is high, you should ask your bank or credit card issuer about increasing your total credit limit.

Don't make the mistake of believing that if your credit card company agrees to do this, you can go out and spend even more, since this will just increase your credit usage rather than decrease it.

5. Avoid Multiple Credit Enquiries in a Short While

Too many loans and credit card inquiries in a short period of time do not generate a favourable image. A credit-hungry attitude is shown by the fact that you're trying to get loans from a variety of different lenders.

To avoid having your score plummet, you must cease applying for numerous credit cards and loans in a short period of time, instead. Aside from that, certain lenders may take advantage of your predicament to entice you into taking out high-interest loans.

6. Repay your EMIs on Time

Keeping your financial responsibilities current is essential. To prevent any bouncing EMIs, please make sure your account is paid well in advance of the due date. The key to a high CIBIL score is making on-time payments on all of your EMIs and outstanding balances.

If you fail on your loan, you must contact your lender right away and pay the whole amount owing, plus any late fees or penalties that may be assessed.

Final Thoughts

You may incorporate these practices into your daily life and see your credit score rise over time. The important thing to keep in mind is that taking these measures will not result in an instant rise or fall in your score. You may expect to see an increase in your credit score in 6 to 12 months after putting these strategies into action.

More About Stock / Share Market

Open Free Demat Account

Be a part of 5paisa community - The first listed discount broker of India.