How to improve CIBIL score: When sudden financial needs arise, such as a medical emergency, building a house, or buying land, taking a loan is a common solution. But to get the loan your CIBIL Score It is important to be good. If your CIBIL score is bad, don’t worry. It is entirely possible to improve this. Here we are telling about five easy and effective ways to improve CIBIL score.
What is CIBIL score and why is it important?
CIBIL Score (Credit Information Bureau India Limited Score) is a measure of your credit worthiness. It ranges between Rs 300 to Rs 900 and tells you how capable you are in repaying your loan or credit card installments on time.
- score above 750:It’s a good score. With this you can easily get a loan.
- score 300 to 600:It is considered bad. This can make it difficult to get a loan.
- score monitoring: Your credit score depends on how you use your loans and credit cards.
What to do if CIBIL score is bad?
If your CIBIL score is less than 750, there is no need to panic. It can be improved by taking the right steps. Let us know those 5 ways which can improve your CIBIL score.
1. Repay your loan on time
Your credit score depends on how timely you repay your loan.
- Pay EMI regularly: Making payments on time strengthens your credit score.
- avoid default: Delay in payment leads to penalty and credit score drop.
- Set up auto-debit:Avail auto-debit facility from the bank to repay the installments on time.
tip: If your EMI is large, cut down your expenses to repay it on time.
2. Maintain correct credit balance
You should have a balance between secured and unsecured loans.
- secured loan Give preference to (home loan, car loan) as these are secured.
- unsecured loan Repay (personal loan, credit card) on time.
- Settle credit card dues quickly:It positively affects your credit score.
Note: Taking more unsecured loans can have a negative impact on your score.
3. Use credit card limit wisely
Proper use of credit card helps in improving your CIBIL score.
- Follow the 30% rule: Use only 30% of your credit limit.
- pay on time: Pay the bill before the due date.
- make full payment: Pay the entire outstanding amount instead of paying the minimum amount.
Example: If your credit limit is ₹1,00,000, try not to spend more than ₹30,000.
4. Avoid becoming a guarantor of the loan
If you become a guarantor of someone else’s loan, their default may also affect your CIBIL score.
- be careful: Become guarantor only for those people on whom you have full confidence.
- One Loan at a Time: Instead of taking multiple loans, finish one loan first and then take another.
pay attention: Any lapse in terms of guarantee can directly impact your score.
5. Choose long term loans
Keeping the loan repayment period longer reduces your monthly EMI, making the payment easier.
- Choose low EMI option: It reduces the probability of default.
- stay disciplined: Pay EMI on time, this improves your credit score.
tip: Do not take short term loan without necessity as chances of default are high.
How to check CIBIL score?
You can check your CIBIL score online.
- Visit the official website of CIBIL.
- Click on “Get Your CIBIL Score”.
- Fill in name, email, password, and other required details.
- Enter an ID proof and date of birth.
- Enter OTP and click on “Continue”.
- Check your score from “Go to Dashboard”.
How long does it take to improve credit score?
It usually takes 4 to 13 months to improve your credit score. It depends on your financial habits.
- pay on time: Make regular payments of EMIs and bills.
- maintain credit limit balance: Follow the 30% rule.
- be patient: Credit scores improve gradually, so don’t expect quick results.
