Looking for ways to improving your CIBIL score? In this blog, you will learn about what is a good credit score and different ways of improving your CIBIL score. We know that a good score can get you a quicker and better loan. Whereas on the contrary, a bad CIBIL score can affect you terribly when you face an urgent need for money.
There are many ways to acquire a loan, today almost every bank has made it a compulsory requirement to have a high CIBIL score. In India, CIBIL is one of the main credit rating agencies. Financial institutions and Banks use the CIBIL score as a reference key to evaluating the creditworthiness of the person borrowing. A score above 700 is considered outstanding. Anything lower than 650 can be bad and you end up facing problems.
- Pay Your Dues On Time
One of the primary reasons why your credit history gets hurt is because of your delayed dues. Missed an EMI? Setback in credit card payment? Get it all organised. Being disciplined with your credit is very important, for this you must set reminders for your payments. Your settlement and closure of remaining debts can have an impact on your credit score.
When you delay EMI’s, it not only affects your pocket by charging you an extra fee but also lowers your credit score. So if you are looking for ways to improve your CIBIL score, this is a great place to get started!
- Use Credit Prudently
Avoid applying for multiple loans at once. To keep your score from crashing, before taking another loan, pay off the previous one. If you take numerous loans at once, it becomes evident that you are in a sad cycle with insufficient funds. This will result in a further decrease in your credit score. Repay your loans successfully instead and give your credit score a boost.
- Limit Your Credit
Don’t give out the impression that you are constantly in need of credit. Only apply for new credit if you can repay as opposed to needing it. Too much debt is not good for your credit score. To be able to restrict your usage, get in touch with your lender and then optimize your credit limit based on your spending habits.
- Review Your Credit History Frequently
Monitor your credit score report annually and check for any kind of errors and inconsistencies. If you find any, immediately report it. At times CIBIL might make some mistakes in updating and revising your records. You may find incorrect information entered or a delay in the record details mentioned. Sometimes the loan that you have already paid is not mentioned in your credit report record. All this can have a negative effect, hence it is important to rectify them instantly.
- Build Up A Positive History
Debt is inevitable, but it depends on what kind of debt you are taking. One could choose a longer tenor when applying for a loan, this ensures that the EMI is low. You can even boost your credit limit. This is one of the ways to improving your CIBIL score. The trick here is to have a lot more credit meanwhile you keep your utilisation low that positively impacts your score.
- Avoid Credit Card Inquiries
When you increase your credit card inquiries, it can affect your credit score. Try to investigate through online platforms which avoid contacting the credit bureaus and thus indirectly contribute to boosting your CIBIL score.
- Avoid Closure Of Older Accounts
Older accounts act as a reference that shows you as a long and loyal association & connection with the lending institution. Credit bureaus consider this as a good thing. This will help you improve your CIBIL score.
- Avoid Becoming A Joint Account Holder
Say no when someone asks you to become a joint account holder or a guarantor for their loans. Any jeopardy in their payment will eventually reflect on your CIBIL score.
- Increase Your Credit Limit
If your bank asks you to increase the credit limit of your card then always say yes. It does not mean now you have a chance to spend more money, this only means that you can become smart about your expenses and manage them properly. The easy trick is to have increased credit while keeping your utilization at the bay; this eventually impacts your credit score.
Usually, it takes 4-13 months to improve your score. It completely depends from individual to individual and their situation. All you have to be is patient, disciplined, and smart while spending and taking a loan. It is that easy! Good luck!
FAQs
1. What is the minimum CIBIL score for education loan?
The applicant’s and co-applicant’s CIBIL score is one of the most significant factors in a student loan. The score could be anywhere between 1 and 999. However, a CIBIL score of 750 or more is needed to acquire an education. Loan approvals would be challenging for applicants having a CIBIL score of less than 600.
2. What is CIBIL score for a student?
A person’s creditworthiness is represented numerically by their CIBIL score. The CIBIL score is calculated by considering your credit history, the volume of bad credit you have previously held, and the amount of bad credit you currently hold.
3. Can I get student loan with bad credit?
The CIBIL score is used by financial institutions and banks to evaluate the creditworthiness of the borrower. A score of 700 or higher is considered excellent. Anything less than 650 can be difficult.
4. Can your education loan impact the CIBIL score?
Yes, your education loan can have a significant impact on your CIBIL score because, like any other loan, it must be repaid in order to maintain a good CIBIL score. The only difference here could be that it can be paid once he/she completes the course (education) and finds work.
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