Are you struggling with getting a loan? Do you need a quick solution for your credit scores, then let me tell you something- credit scores did improve in a day. If you want your credit score to be good enough, you need two things- 1) discipline and 2) educating yourself about available choices. Don’t worry if you are not aware of this; we will guide you to improve your CIBIL score.

Before we move forward, it is important to know which score is considered a good Credit score.

What is a good credit score?

CIBIL score is a credit score of a 3-digit numerical composition ranging from 300 and 900. If your score is closer to 900, then you have a better credit score. According to the stat, a 750 credit score is considered perfect for taking a loan on agreeable terms. But in case your credit score is less than an ideal score, you need to improve the credit score.

Now, you must be wondering why it is important to have a good CIBIL score. Let’s understand it.

What are the benefits of having a good CIBIL score?

In India, CIBIL is known as one of the trusted credit agencies, as its scores are the most accurate amongst all credit rating agencies. If you have a good or high CIBIL score, that means your company’s finances are into good and efficient management. Therefore, it becomes important to improve your CIBIL score and maintain it as per the CIBIL guidelines. A good score not only helps you to get loan approval quickly but also provides borrowers several perks. Let’s look at those advantages one by one.

  • Speedy loan approvals: Having a good credit score shows you as a reliable borrower in a lender’s eyes. Consequently, banks try to approve their loans as fast as possible.
  • Lower interest rates: People who have good CIBIL scores obtain loans at much lower interest rates as compared to those with lower CIBIL scores.
  • Negotiation authority: People who have high CIBIL scores have the authority to negotiate for a lower interest rate with banks/financial institutions
  • Easy credit: As I mentioned above, a high CIBIL score indicates that you have healthy financial management by a person or a company, and therefore banks rely on them.
  • The credit card offers: Banks usually present interesting offers and schemes to those people who have a good CIBIL score.
  • Higher loan limit: A great CIBIL score can benefit you to take a loan of a higher limit, that too on a low-interest rate.

How to improve CIBIL score

Since we have seen the importance of a good and high CIBIL score, you must be looking for measures that help you improve your credit score. There are a few measures below that will help you out.

1.   Keep Checking your credit utilization ratio.

To improve the credit score, you should keep in mind that it is not necessary to use Credit cards for every transaction you perform. The reason behind avoiding your credit card is that your credit card utilization ratio should be below 30%, as maintaining low monthly balances shows a great CIBIL score.

2. Clear credit card balances.

Another way to improve the CIBIL score is to clear your credit card balance. Balance means outstanding EMI’s and loans that are impacting the CIBIL score. To improve your credit score, you need to contact the lender bank and pay the dues.

3. Removing errors from the CIBIL report.

As I have mentioned above, you should regularly check your CIBIL report to check on the information. However, if you find any incorrect detail, it becomes crucial to get it corrected quickly so that it did not hamper your CIBIL score.

4. Review your credit report regularly.

It will help if you check or review your CIBIL reports regularly. This report will help you recognize the factors or reasons that led your CIBIL score to be low. Usually, these factors incorporate due or delayed loans. Identifying the errors helps you to improve your credit score. And if you need precise information, then contacting a designated bank or a financial institution will help you to rectify the errors.

5. Raise the limit of your credit card.

If you want to maintain a good credit score, you need to ask your bank to raise the limit of credit cards to have more credit available to you. But keep in mind that this extra credit does not mean that you have to spend beyond your limit. Having a low credit utilization ratio and high credit availability showcases you as a responsible borrower and leads to a high CIBIL score.

6. Pay EMI on Time

If you want to make a purchase of something big like home appliances or home, and a car then you have to make sure that you repay bills and EMIs on time. Making timely EMIs payment is very important. It is one of the important aspects that credit scorers or CIBIL consider while assessing your credit ratings. There you have to maintain a good credit score if you want your loan to be approved.

Wrapping it up

You should always maintain a high CIBIL score as it works like a report card that reflects your prior performance and behavior as a borrower. The parameter builds trust between you and your bank by assuring you will repay their loaned money on time. In today’s time, getting loans becomes difficult because of trust issues; therefore, getting loans is like a boon and leads you to achieve happiness.

You need to maintain a good credit history, and in case you do not have a good history, you need to follow the above measures to improve CIBIL score, as we have seen that a bad credit score can hamper your credit requirements in the future. Therefore you have to maintain it from the beginning as it will take a lot of time to improve your CIBIL score.

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April 2021