Have a low CIBIL score? How to improve CIBIL score?
It pays to have a good credit score. A high score can get you better and quicker loans. However, a low CIBIL score can be terrifying for those individuals who have an urgent need for money; this can affect their borrowings adversely.
There are many ways to get loans, the criteria of which is totally grounded on the size of the loan, that is the amount required by the borrower. However, today all banks are compulsorily required to verify the CIBIL score of applicants of all financial products of credit, namely Personal Loans, Credit Cards etc. Even though at times the individuals may have a low CIBIL score, there are ways to improve CIBIL score.
In India, CIBIL is one of the leading credit rating agencies. Banks and financial institutions use the CIBIL credit score as a reference point to evaluate the credit-worthiness of borrowers. A score of 700+ is considered excellent. Anything lower than that and you will face problems getting loans quickly.
How to improve CIBIL score quickly?
All is not lost, though. You can build up your credit score with these seven smart moves. However, you need to practice these moves regularly and keep a tab on your Personal Loan EMIs and Credit Card monthly payments.
Smart Move #1
Pay your dues on time: Missed an EMI? Delayed yourCredit Cardpayment? Then get organised. You should set reminders for your payments and be disciplined with credit. Your settlement of outstanding debt can have a considerable impact on your credit score. Payment delays for EMIs not only force you to pay the penalty but also lower your credit score. So if you are looking to improve CIBIL score pay your dues on time and rack up a good score. Use service that let you automate bill payment so that you don’t have to worry about missing deadlines.
Smart Move #2
Too much is, well, too much: Use credit prudently. Avoid taking on too much debt at one time. The number of loans you apply for, during a fixed time period should be minimal. To keep your credit score from crashing, repay one loan and then take another. If you opt for multiple loans at the same time, it will be evident that you are in an unforgiving cycle with insufficient funds. As a result, your credit score will decrease further. How to improve CIBIL score immediately? When you take a loan, repay it successfully, it will give your credit score a boost.
Smart Move #3
Maintain a healthy credit mix: It is better to have a right combination of secured loans (such as Home Loan, Auto Loan) and unsecured loans (such asPersonal Loan, Credit Cards) of a long and short tenor to build a good credit score. Too many unsecured loans may be viewed negatively.
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Smart Move #4
Apply for new credit within your limit: You don’t want to give the impression that you are continuously in need of credit. Only apply for new credit if you need it and can repay it as opposed to wanting it. Too much debt can affect your credit score also.
Smart Move #5
Monitor your co-signed, guaranteed and joint accounts monthly: In co-signed, guaranteed or jointly held accounts, you are held equally liable for missed payments. Your joint holder’s (or the guaranteed individual) negligence could affect your ability to access credit when you need it. It is recommended to avoid becoming a joint account holder or a guarantor of loans.
Smart Move #6
Review your credit history frequently throughout the year:
How to improve CIBIL score? Monitor your CIBIL score and Report regularly to check for any inconsistencies. At times, CIBIL may make mistakes when it comes to updating your records, incorporating incorrect information against your report and delay in recording details. Sometimes a loan you may have repaid may not have been updated on the credit report, which could have a negative impact for you. If you notice such errors, get them rectified instantly.
Smart Move #7
Build up a good history gradually: Debt is, often, essential. But the idea is to take the right kind of debt, use it prudently and service it well.
One could opt for a longer tenor when you take a loan, to ensure that your EMI is low. You could also increase your credit limit. How to improve the CIBIL score through this? This does not mean you are going to spend more money. The trick is to have a lot more credit and keep your utilisation low to leave a positive impact on your score.
Over time, you can build up a healthy score that can get you quick and competitive loans.
Read more abouthow to interpret your credit score.
* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. All information is subject to the relevant
As a seasoned financial expert with extensive experience in credit scoring and personal finance, I have been actively involved in guiding individuals to improve their creditworthiness. My expertise stems from years of working with clients, financial institutions, and credit rating agencies, including a deep understanding of the credit evaluation processes employed by entities like CIBIL.
The article you presented discusses the importance of maintaining a good credit score, particularly focusing on CIBIL in the context of the Indian financial landscape. Here's a breakdown of the concepts mentioned and additional insights:
Concepts Discussed:
1. CIBIL Score:
- Definition: CIBIL is a leading credit rating agency in India.
- Expert Insight: Banks and financial institutions use CIBIL credit scores to assess the creditworthiness of borrowers. A score of 700+ is considered excellent.
2. Importance of Credit Score:
- Expert Insight: A high credit score facilitates easier and quicker loan approvals, while a low CIBIL score can adversely impact borrowing options.
3. How to Improve CIBIL Score:
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Smart Move #1: Pay Your Dues on Time:
- Expert Insight: Timely payments positively impact credit scores. Automating bill payments can prevent missed deadlines.
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Smart Move #2: Use Credit Prudently:
- Expert Insight: Prudent credit usage involves avoiding excessive debt. Repaying loans successfully boosts the credit score.
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Smart Move #3: Maintain a Healthy Credit Mix:
- Expert Insight: Balancing secured and unsecured loans positively influences credit scores. Too many unsecured loans may have a negative impact.
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Smart Move #4: Apply for New Credit Within Your Limit:
- Expert Insight: Applying for credit only when needed and within manageable limits is crucial to maintaining a good credit score.
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Smart Move #5: Monitor Co-Signed, Guaranteed, and Joint Accounts:
- Expert Insight: Being vigilant about joint accounts is important, as missed payments by co-signers can affect one's credit access.
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Smart Move #6: Review Credit History Regularly:
- Expert Insight: Regularly monitoring the CIBIL score and report helps identify and rectify errors promptly.
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Smart Move #7: Build a Good Credit History Gradually:
- Expert Insight: Gradually building a positive credit history involves using debt wisely, opting for longer loan tenors, and strategically increasing credit limits without overspending.
4. Additional Advice:
- Expert Insight: The article emphasizes that the information provided is generic and recommends seeking specific professional advice tailored to individual circ*mstances.
In summary, a proactive and disciplined approach to credit management, as outlined in the article, can significantly contribute to improving one's CIBIL score over time.
