10 Guaranteed Ways to Improve Your CIBIL Score

If you wish to Improve your CIBIL Score, here are the top 10 options available:

Credit Card
Every financial institutions issuer has different credit card eligibility criteria. Flickr

Whether you are looking for a Home Loan in India or any other credit facility, one of the most important things is your CIBIL Score. The higher the CIBIL score, the more are the chances of getting an approval on loan. You are also able to negotiate better deals when you have a high CIBIL Score.

Your CIBIL score is calculated based on the promptness of your repayments towards the credit facilities availed, the loans and credits that are currently against your name and your general credit behavior. Individuals with a higher CIBIL Score are considered more reliable by lenders.

If you wish to Improve your CIBIL Score, here are the top 10 options available:

1. Make Regular Repayments

The most important factor to affect your CIBIL Score is the repayment history that you have. You need to make sure that EMIs towards existing loans, Credit Card repayments, and any other credit facilities are made on or before the due date. The discipline in making your repayments leads to better CIBIL Score. It helps to set reminders on your phone for bill payments.

2. Avoid Cash Withdrawals With Credit Cards

Most Credit Cards today provide a cash withdrawal facility. Make sure that this is utilized only during an emergency. Regular withdrawals using your Credit Cards indicate a financial crunch and can reflect poorly in your credit history.

3. Have a Balance between Unsecured and Secured Loans

Having a right mix of different kinds of loans can work wonders for your Credit Score. It is a good idea to have both Secured and Unsecured Loans. Having only Unsecured Loans is also an indication of a difficult financial situation and can reflect poorly on your credit behavior. If you have a mix of various kinds of loans such as Mortgage Loans, Vehicle Loans and Home Loans in India, you are considered a much more reliable candidate for an added credit facility.

4. Reduce Debt Utilization

The lesser the loan amount that you use, the better it is for your CIBIL Score. Even with your Credit Card, minimize usage on the available limit. This reduces the repayments that you make towards these credit facilities each month. This, in turn, improves your debt-to-income ratio, which plays a vital role in your CIBIL Score.

Having a low debt-to-income ratio means that you have a sizable income that can help you make repayments towards credit facilities and also meet your day-to-day expenses.

credit card
When you fail to make your credit card bill payments, not only does your credit score take a hit, but you also show bad repayment capabilities.

5. Make Sure That All Incorrect Information from Credit Report is Removed

It is very important for you to check your Credit Report regularly. You can get your credit information report each year or twice a year from any of the major credit bureaus. Studies have revealed that on many occasions, individuals can have a much lower Credit Score than they should actually have. This could be because of any wrong information that is entered in your Credit Report. Make sure to dispute wrong records on your CIBIL report.

6. Avoid Applying for New Credit Cards

Every time you avail of any credit facility, your Credit Score reduces. It is also true that the credit inquiry is stricter with every new application that you make for a Credit Card. Making too many inquiries with different institutions can also affect your Credit Score. This is why experts advise you to research different cards available thoroughly before you apply for one. Do not make multiple applications even if it is your first time Availing a Credit Card as it has a major impact on your Score.

7. Pay Off Your Debts

The simplest way to improve your debt to income ratio is to repay your debts as soon as possible. If you have access to any additional funds and have loans that do not charge any prepayment fees, it is a good idea to close the loan account. You can also reduce the tenure of the loan after you have made a few payments towards the EMI. This helps you close your loan account faster, and gives you a better CIBIL Score as the debt to ration income reduces.

8. Pay More than the Minimum Balance

Avoid using the revolving credit facility that is provided on your card. Yes, there could be instances when you can only make minimum balance repayments. However, on other occasions, it is a good idea to pay a little more than your minimum balance. This helps reduce the outstanding amount. Remember that your Credit Card accounts for a significant portion of your Credit Score. As a result, it is a good idea to clear the outstanding amount faster. The idea is to reduce the collective balance that you have towards different Credit Cards to enjoy a better Credit Report.

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9. Retain All Existing Credit Cards

If you already have multiple Credit Cards, it can work to your favor even if you do not use most of them. This indicates that you have long Credit History. This shows that your Credit Worthiness is high, because of which lenders can provide you with multiple credit facilities. Keeping your Credit Card account active even if it is not used frequently, your credit history lengthens and helps you improve your CIBIL Score. Unless you are paying too much towards the annual fees, it is a good idea to retain old Credit Card.

10. Get Professional Guidance

You have the option of working with professionals such as finance consultants and consumer credit counselors who help you understand your credit report in depth. This is especially useful for those who currently have a bad CIBIL Score but are unable to revive it despite trying most techniques and methods. With professional help, you can successfully improve your Credit Score effectively.


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