How to Increase Your CIBIL Credit Score
A credit score is the numerical summary of a credit report which describes your credit habits, loans previously availed, repayments made, etc. Having a good credit score is an advantage and is definitely worth the effort it takes to maintain the same. Knowing how to increase credit score is important so as to avail of loans and credit cards easily.
Credit scores range from 300 to 900 but in order to be considered creditworthy, your credit score must be above 700 or even 750, and maintaining this is essential for a healthy financial future. Follow these 5 steps to increase credit score fast.
5 Steps to Increase Your CIBIL Credit score
- Clear All Debts
Paying off debts should be your mantra as following this step will help you increase your credit score fast. Additionally, paying off dues on time is also just as important. Prior to availing more loans or credit, ensure that all previous debts are cleared.
Set reminders, organize your finances, and try to stay as disciplined as possible to ensure that your EMIs are paid on time. Payment delays don’t just reduce your credit score but can also attract a penalty. Foreclosure or part-payment is an option that should be explored only if it has a positive impact on your credit score. It is also advised to borrow only as much as you are able to repay as excessive borrowing can hinder your credit score.
- Say No to Multiple Loans or Credit Lines At the Same Time
Procuring multiple loans and credit simultaneously puts a huge burden on your finances. Additionally, this is also an indication to the lenders that you are credit hungry and these together can result in a low credit score. In order to increase your credit score, borrow only as much as you can repay and ensure that the repayment is made on time. While availing of a new credit card can increase your credit limit, applying for multiple credit cards can result in a hard inquiry which can also have a negative impact on your credit score.
- Maintain Older Credit Cards
Did you know that maintaining a card with a long credit history can increase your credit score? Building a good credit history takes time and is also an indication of a trustworthy borrower. But as is the case with other types of loans and credit, all payments must have been made on time. Therefore, if you have a credit card that is quite old, don’t close it just yet.
Do Not Overuse Credit
It may seem tempting to shop extravagantly using credit cards or a new personal loan but overutilization of your credit can significantly reduce your credit score. Expert opinions dictate that one must ideally use only 30% of their credit limit. Using your credit card judiciously and paying bills on time will definitely help you increase your credit score.
- Review Your Credit Report Regularly Your credit report contains details of all your financial activities such as loan availed, repayments made, credit card procured, etc and a credit score, as mentioned above, is a numerical summary of the same. In certain cases, however, there may be mistakes in your credit report which will have to be rectified at the earliest so as to prevent low credit scores.
Having a good credit score is an indication that you are creditworthy and you will be able to receive loans and credit cards with relative ease. Knowing how to increase your CIBIL score or credit score is a big advantage and improves your finances tremendously. Being credit savvy is not rocket science and the steps above will help you get closer to your goal. However if in case you have a low credit score but are still in need of emergency loans, check out Money View, one of the most trusted loan providers in the country.
Frequently Asked Questions (FAQ)
- What is the difference between a CIBIL score and a credit score?
TransUnion CIBIL Ltd. is one of the top credit information companies in India that maintains credit files on thousands of individuals. The credit score provided by CIBIL is known as CIBIL score and can range between 300 and 900. Any score above 750 is considered to be good.
- How can I increase my CIBIL score?
Knowing how to improve the CIBIL score fast is always an advantage. Following the steps mentioned above such as paying off debts on time, having a healthy mix of debts, not availing of too many loans at the same time can help in increasing your CIBIL score fast.
- What are some additional tips that can increase my CIBIL score from 600 to 750?
Popular tips that can help you increase your credit/CIBIL score, in addition to the ones mentioned above are as follows:
- Choose your credit cards and loans with care. Avail only those that are in alignment with your financial goals as well as the current situation
- Do not use your credit cards to withdraw cash unless in an emergency
- Procure loans only if you are able to repay the same on time and avoid opting for multiple unsecured loans simultaneously
- If you are planning to act as guarantor or co-signer for a loan, ensure that the borrower is in a position to repay the same as not doing so can significantly reduce your credit score as well