How to Improve CIBIL Score – Tips to Boost Credit Health

Maintaining a strong CIBIL score is essential for securing credit on favourable terms in India. Whether you're planning to apply for a loan, get a credit card, or simply build long-term financial stability, your credit score plays a vital role. A low score can limit your options, while a good score can help you access higher limits and better interest rates. This guide explains the key reasons behind a low CIBIL score and outlines practical, proven strategies to improve it steadily and responsibly.

Several factors may lead to a drop in your CIBIL score. Being aware of these can help you avoid common credit mistakes:

• Irregular or missed loan and credit card payments

• High credit card utilisation

• Too many loan applications in a short time

• Settling loans instead of repaying in full

• Defaulting on EMIs or credit dues

• Errors or outdated information in your credit report

• Lack of a credit history

Improving your CIBIL score is not instant, but consistent, healthy credit behaviour can lead to gradual and steady progress. Below are some of the most effective strategies to help you build and maintain a strong credit profile.

1. Pay Your Dues on Time

Late or missed payments are one of the most common reasons for a low credit score. Timely repayment of all your dues helps demonstrate financial discipline to credit bureaus.

• Always pay EMIs and credit card bills on or before the due date

• Enable auto-debit or standing instructions to avoid missing payments

• Pay at least the minimum due on credit cards if full payment is not possible

2. Diversify Your Credit Portfolio

Having a healthy mix of different types of credit—such as credit cards, personal loans, and secured loans like home or auto loans—helps improve your creditworthiness.

• Maintain both secured and unsecured credit

• Avoid depending on only one type of credit (e.g., just credit cards or only loans)

• Take smaller loans and repay them on time to show responsible borrowing

3. Avoid Settlements

Settling a loan or credit card for a lower amount than what you owe can negatively affect your credit score, as it indicates an inability or unwillingness to repay debt fully.

• Try to repay your full outstanding amount

• If you're struggling, consider restructuring options with the lender

• Avoid accepting settlements unless absolutely necessary and understand the impact

4. Limit Frequency of Loan and Credit Card Applications

Each time you apply for credit, lenders perform a hard enquiry. Too many enquiries in a short period make you look credit-hungry, which can lower your score.

• Apply for loans or credit cards only when needed

• Compare and check eligibility using pre-approved offers or soft enquiries

• Maintain gaps between multiple applications

5. Monitor Your Credit Report

Mistakes in your credit report, such as incorrect account details or outdated information, can bring down your score without your knowledge.

• Check your credit report at least twice a year

• Identify and dispute any errors or unauthorised accounts

• Use apps like Bajaj Markets or the CIBIL website for regular checks

6. Opt for a Healthy Credit Mix

Credit bureaus assess how you handle different kinds of credit. A good mix shows that you can manage both short-term and long-term credit responsibly.

• Maintain a combination of revolving credit (like credit cards) and term loans

• Do not rely entirely on unsecured loans

• If you only have one credit type, consider adding another responsibly

7. Reduce Credit Risks

Taking on too much debt increases your credit risk and weakens your repayment capacity. This may make lenders hesitant to approve future credit.

• Avoid borrowing beyond your income level

• Try to keep your debt-to-income ratio under 40%

• If you have multiple loans, consider consolidating them with better terms

8. Maintain a Low Credit Utilisation Ratio

Using too much of your available credit limit can signal dependency on credit, which harms your score even if you pay your bills on time.

• Keep credit utilisation below 30% of your total credit limit

• If your usage is consistently high, request a higher limit or pay more frequently

• Avoid maxing out your credit cards regularly

9. Maintain Old Credit Cards

The length of your credit history matters. Older accounts contribute positively by showing long-term credit behaviour.

• Do not close your oldest credit card account even if you don’t use it much

• Make small purchases occasionally to keep the account active

• Repay dues on time to continue building your history

10. Limit Credit Inquiries

Too many credit enquiries in a short span can lower your score, as it indicates a reliance on credit or potential financial distress.

• Avoid applying for multiple credit cards or loans at once

• Choose lenders who offer eligibility checks through soft enquiries

• Use digital platforms to compare options before applying

11. Patience and Consistency

CIBIL scores don’t improve overnight. Positive changes take time to reflect in your credit profile, especially after previous defaults or missed payments.

• Follow all credit practices consistently for 6 to 12 months

• Avoid shortcuts like credit repair agencies that make unrealistic promises

• Focus on sustainable credit habits for long-term results

12. Avoid Co-signing or Guaranteeing Loans if You Are Unsure About the Borrower

If the borrower defaults, your credit record is affected too.

• Take responsibility only if you trust the borrower's repayment ability

• Monitor the account regularly if you become a guarantor

A good CIBIL score is essential when it comes to managing your finances and accessing credit. Here are some key reasons why maintaining a high score is important:

 

Easier Loan Approvals:

When you apply for a loan, whether it's for a home, car, or personal needs, lenders check your CIBIL score first. A good score indicates to lenders that you’re a reliable borrower, which increases your chances of getting your loan approved quickly and easily.

 

Better Interest Rates:

A higher CIBIL score often means you qualify for lower interest rates on loans and credit cards. Lenders see you as less risky, so they’re more likely to offer favourable terms. This can save you a lot of money in interest payments over time.

 

Higher Loan Amounts:

If you have a strong CIBIL score, lenders are more likely to offer you higher loan amounts. This can be especially useful when you’re making a big purchase like a house or planning for major expenses, such as education or medical needs.

 

Access to Premium Credit Cards:

Many banks and financial institutions reserve their premium credit cards—those with better rewards, benefits, and cashback offers—for customers with high CIBIL scores. With a good score, you can enjoy these exclusive perks that may not be available to others.

 

Approval for Rental Agreements and Utility Services:

 

Many landlords and utility service providers now check credit scores as part of their approval process. A high CIBIL score can make it easier to secure a rental agreement or get utilities like electricity and internet connection without any hassle.

 

Maintaining a good CIBIL score opens the door to many financial opportunities. It gives you more control over your borrowing and enables you to save money in the long run. Make sure to check your score regularly and practice healthy credit habits to keep it in a healthy range.

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