Quick Tips for Boosting Your CIBIL Score

Planning to take a loan? Want the loan to be approved and processed quickly? Looking for a loan at lower interest rates? If your answer is yes to any of these questions, then you need to make sure your credit scoreis good.

Table of Content

• 8 Tips to Consider for Boosting Your CIBIL Score
• Conclusion

Acredit scoreis a numerical representation of your creditworthiness, which lenders use to know the risk of lending you money. In India, the most widely used credit rating is calculated by CIBIL, a credit information bureau. A CIBIL score ranges from 300 to 900, with higher scores indicating better creditworthiness. This score plays a crucial role in determining your eligibility for loans, the interest rates you'll be offered, and even your ability to get a credit card.

So, how do you improve your CIBIL score? While it won’t happen overnight, by taking some actionable steps you will definitely be able to improve it. To help you, here are some quick tips for boosting your CIBIL score:

8 Tips to Consider for Boosting Your CIBIL Score

Make Timely Payments on EMIs

Only making your EMI payment is not enough? You need to make sure you make your payments on time, as every late payment affects your CIBIL score. A great way to manage your payments more effectively is to start an automatic payment from your bank that facilitates timely payments. Then all that is left for you is to ensure that there are enough funds in your account to allow transfer.

Clear Your Existing Debt

If you have an existing debt on you, then until you repay it, it will negatively affect your CIBIL score. So, it is crucial to repay your existing debt. You can do this either by repaying it within your chosen timeline or making a prepayment to foreclose the loan.

Keep an Eye on Credit Utilization Score

Your credit utilization score is the percentage of available credit that you're using on your credit cards. It is recommended to keep your credit utilization ratio below 30%. This means using less than 30% of your available credit limit, which shows lenders that you manage credit responsibly, leading to an improved CIBIL score.

Maintain a Healthy Credit Mix

Unsecured loans are considered riskier than secured loans because they are sanctioned without any collateral. That’s why taking only unsecured loans, like car loans or personal loans, can result in low CIBIL scores. To maintain a decent score, it’s always advisable to have a healthy mix of different types of loans to balance the risk factors.

Check Errors in Your Credit Report

Sometimes CIBIL can make mistakes while updating your credit report, such as not updating your already repaid loans. This could result in a low CIBIL score. That’s why you should regularly review your credit report for inaccuracies or outdated information. In case of any discrepancies, be sure to correct them by submitting a credit dispute form online.

To check your CIBIL score online, visit websites like CIBIL, Equifax, etc. These websites let you check free CIBIL scores for a certain period of time.

Suggested Read:How To Check Your Cibil Score Online For Free With A Pan Card?

Keep Your Credit Applications Low

Each time you apply for a new loan, a hard enquiry is placed on your credit report. A hard enquiry happens when lenders review your credit history to assess your eligibility. These inquiries can cause a slight, temporary dip in your credit score. To mitigate the impact of hard inquiries, apply for loans only when you're confident in your eligibility and have carefully considered your options.

Show Good Debt

Many of us believe that if we don’t ever take on debt, then it will be good for our CIBIL score. However, that’s not how it works. Without any history of debt, the lender has no idea about your ability to repay the loan, resulting in a low CIBIL score. This is why you should use your credit card now and then or take a loan when necessary.

Increase Your Credit Card Limit

Increasing your credit card limit doesn't mean that you increase your expenditure as well. The goal of raising your credit limit is to provide you with more available credit while maintaining a low credit utilization ratio. By keeping your utilization low, even with a higher limit, you can positively impact your credit or CIBIL score. 

Suggested Read:9 Best Practices To Improve Your Credit Score

Conclusion

In conclusion, Improving your credit score takes time and effort, but by consistently following the above tips, you too can significantly boost your creditworthiness. Remember, a good CIBIL score opens doors to better financial opportunities, so make it a priority in your financial journey.

To check your CIBIL score online for free, consider visiting Muthoot Finance's official website. There you can find a detailed process of checking CIBIL score and much more.