How to increase CIBIL score?

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Find out different ways to enhance your CIBIL score.

Key Takeaways

• CIBIL is a 3-digit score that depicts your credit repayment behaviour
• It demonstrates how credible you are as a borrower
• You can increase your CIBIL score by paying off your outstanding dues on time.
• You should also avoid utilising the maximum credit limit on your credit cards
• Lenders tend to approve loans if your credit score exceeds 750 points quickly

When you apply for a loan, you need to meet a few prerequisites of the lender. You need to provide a series of documents and show that you have the loan repayment capacity. The Credit or CIBIL score document helps lenders judge your creditworthiness. Before you apply for a loan, ensure you have a high CIBIL score. There are different ways to increase the CIBIL score. Find out how to improve the CIBIL score in this article.

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What Is a Good CIBIL Score?

CIBIL scores range from 300-900 points. However, a good CIBIL score typically exceeds 750 out of 900 possible points. With such a score, you can easily procure lower interest loans. Such a score increases the lenders’ beliefs that you will repay your loan on time.

How To Increase CIBIL Score?

You can do several things to amp up your CIBIL score. They are as under

Be regular with your credit payments

Ensure you are regular with your outstanding payments, including loan EMIS, credit card bills, etc. Do not miss out on any due date. Not paying your bills on time significantly impacts your credit score, and it can take you a while to enhance your score again.

Keep a check on your credit utilisation ratio

Another way how to improve your CIBIL score is to monitor your credit utilization ratios. A good rule of thumb is not to utilize your entire credit limit on your credit cards. Ideally, you should avoid using more than 30 per cent of your credit limit to keep your high credit scores. For example, let us say your credit limit is INR 100,000. It is best not to spend more than INR 30,000 on that credit card in such a case. Both underutilization and overutilization can be harmful to your CIBIL score.

Have a clean and reliable record

Maintain records of all your payments and clear debts. One of the primary reasons banks ask for your credit report is to observe your past credit behaviour. If you have removed all your dues within the stipulated time frame, it reflects very well on your credit report. By maintaining your records, you can demonstrate your solid repayment history.

Take up offers for new credit cards or higher credit limits

If a bank offers a new credit card or your existing creditor provides to increase your credit limit, you should take up the offer, as it shows that you are considered creditworthy. However, remember the 30 per cent credit utilisation rule. Do not increase your spending just because you have a higher credit limit. The low credit utilisation keeps your credit score high.

Final note

Now that you know how to increase your credit score, make sure you follow the tips. Always remember that improving your CIBIL score is a process that is not going to happen overnight. Be patient and consistent and monitor your CIBIL score timely and implement changes as required.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.