A CIBIL score, due to the times that we live in currently, has now gained more importance than ever. Everybody is attempting to secure finances from a myriad of sources due to reasons such as starting a business, re-establishing a business, paying hospital bills or simply managing homes through loans. So, in order to be able to get loans in a hassle-free manner, one is required to know the answers to questions such as “How to increase CIBIL score” and “How to maintain the CIBIL scores that I see on my credit reports?”. This article will essentially teach you how to improve your CIBIL score, how to maintain the CIBIL score that you see on your credit reports and take you through the actions that can be counted as a reason for low CIBIL scores as well, among other functions. Read on to know how to increase your CIBIL scores.
Loans are essentially of two types, namely secured and unsecured loans. If a borrower takes on way too many unsecured forms of loans, banks and financial institutions alike tend to see it as a red flag and might even be inclined towards declining your loan application upfront and without a second thought. In order to avoid such a scenario, a borrower can take unsecured as well as secured loans, such as the ones for cars or homes, which is one of the ways in which they can learn how to maintain CIBIL scores going forward. It must also be noted that Credit Cards also count as a form of unsecured credit advance.
Credit Card or Loan Settlements do not do any favours for an individual’s CIBIL score. What settling a loan or credit card essentially means is that the borrower approaches their bank and then asks for a deal, and of the kind that will allow them to close the debt for an amount that is lower than what is actually due. Banks do entertain such requests at times, but the settlement agreement which has gone through eventually leaves a mark on the credit report and it eventually ends up having a negative effect on the score or a bank's willingness to offer fresh credit to them.
Third in the list of things that can be counted as an answer to the question “How to improve your CIBIL score?” is maintaining a low frequency of the number of applications a borrower must fill up and send to lenders, as credit bureaus such as CIBIL make a note of those things too. Additionally, the representative of the lender is obligated to pull up your credit reports, and such enquiries are recorded by the likes of CIBIL too. Such enquiries by a bank can also cause one’s CIBIL score to come down as well. Such actions have yet another repercussions as well. The first being that you will be tagged as a credit hungry person, and the second one will be that your score comes down fairly significantly, even if you have every intention and the capability of paying back the credit in a timely manner. So, if you want to learn how to increase your CIBIL score, you must learn to do things that will prevent it from getting bad as well.
Errors in the credit report have been widely reported, proving that it is a common occurrence. This is why it is important to keep a check on any possible errors in the report. Check your credit report regularly for inconsistencies. Finserv MARKETS lets you avail a free credit health report. The health report will help you trace any incorrect information, delays in updating the changes and more. If you spot errors, get them reported and rectified instantly.
Credit should always be obtained wisely. Experts advise getting a mix of different kinds of credit in the form of unsecured and secured loans. This can aid in improving your credit history as you effectively serve a wide range of credit repayments. It can increase your CIBIL score to bring you better credit opportunities.
The credit report immediately picks out risks in a borrower’s profile. Be sure to never miss out on credit card payments, making lower payments on the total due and more. These are signs that portray a stretched cash flow and are the first signs of stress in your credit profile.
If you feel like you require more credit, then it is wise to get a higher credit limit. This way you can maintain your credit utilisation while availing higher credit opportunities. You can in turn increase your CIBIL score.
The CIBIL score is based on your credit behaviour from the past. This is why you must maintain a history of your loan accounts for your CIBIL score. You should also keep your old accounts active, even if you do not use them. As long as you have a solid repayment history, keep the historical record for as long as you can.
Every time you apply for a new credit line, the lender assesses your credit report. This check is known as a hard inquiry. It renders a detailed analysis of the credit profile to portray the risk you carry. Too many hard inquiries within a short span of time can have a very negative impact on your CIBIL score and lead to a deep dip.
The CIBIL score cannot be improved over a short span of time. It demands effort over a long period. Thus, you must be patient when working towards improving your CIBIL score. Stay consistent with your efforts and monitor your actions over time. Check your CIBIL score regularly to stay disciplined with regards to your finances.
Now that you have understood how to improve your CIBIL score, let us take a look at the standard practises which are followed by borrowers in order to amplify their CIBIL scores. Read on to know more.
One reason for low CIBIL scores is the act of missing EMI payment due dates. Ergo, it is very important to pay your EMIs and credit cards bills on or before the due date to maintain a good credit score.
Another reason for low CIBIL score is the low percentage of the credit limit available to a creditor at a given point of time, which implies a credit utilisation ratio. It is recommended by many that a borrower should never have a high credit utilisation ratio, as it eventually has a negative impact on one’s CIBIL scores.
Third reason for low CIBIL scores is the inability to strike a balance between the kinds of credit one applies for. It is advised that individuals have a healthy mix of both secured as well as unsecured loans in order to positively impact their overall credit report. It is believed that multiple unsecured loans is counted as a reason for low CIBIL scores. It is also a known fact that a high number of unsecured loans gives the lender the impression that he does not have the ability to offer anything as collateral for them. This eventually brands him or her as a credit unworthy individual in the mind of the official representing the lending institution.
Now that you have understood as to what could be the reason/reasons for low CIBIL scores, let us take a look at the answers to the question “How to maintain CIBIL scores going forward?”. Read on to know more.
One answer to the question “How to Maintain CIBIL scores?” is that at any given point in time, the number of credit advancements that have been taken on by an individual must be at a bare minimum. If one is applying for way too many loans or is always close to the maximum limit of their credit cards, then their score is likely to come down as such activities tend to be an indication of credit hungry behaviour. The best thing to do is to not to take a loan until unless it is absolutely necessary. In addition to the same, one must make sure that they do not come close to their credit limits on their cards.
Secondly, one of the ways in which one can maintain a healthy CIBIL score is by keeping an eye out for such loan applications which could be made by the person who jointly holds a bank account with you. Such is actually a situation where one could suffer even if you are not at fault. In such a scenario, if the borrower is a joint applicant for a loan which has been taken by someone else, and if they end up defaulting on their payment, then the prospective borrower with a clean credit history too can get implicated as they will also lose out in their CIBIL score as it will reflect in their report as well. The best way to avoid this is to ensure that the loans and cards are being paid for on time and loans applied for through joint accounts are anywhere between negligible to zero.
Yet another answer to the question “How to maintain CIBIL scores?” is that a borrower must not try to pick up a loan from a lender even though they have rejected the application for the same once already. If they have applied for a loan or a credit card once and have already been turned down, that information goes into the records of CIBIL. The high frequency of loan applications being filled and submitted is also an indication of credit hungry behaviour. Also, if they go and apply to another bank almost immediately, the first thing they will most likely do is pull up your credit report, which will contain a note concerning the last loan application that was rejected. The best thing to do in such cases is to not apply again and wait for the score to improve after they have performed the aforementioned activities.
It must also be noted that your CIBIL score is one of the most important factors that determine your creditworthiness, especially when availing a loan. A good CIBIL score will make your loan application process simpler and quicker. It is advisable to have your CIBIL score checked, before applying for the loan application. This is because if the CIBIL score is less, you can work towards improving it, which will increase your chances of loan approval. To improve CIBIL score it usually takes anywhere from 4-12 months depending on your situation. Generally, CIBIL score above 750 is recommended. If your score is on the lower end and less than 600, then it will naturally take a while to increase your CIBIL score to 750.
Now that you’re well aware of how to increase CIBIL Score, use these tips to improve your CIBIL score and enjoy the various benefits associated with a higher score. Having a good CIBIL score makes it possible for you to avail a loan and get a better deal from a bank.
With Finserv MARKETS, you can avail a loan and enjoy a myriad of offers. The portal also has features such as personalised pre-approved offers, instant approval, and quick disbursal of loans. Another simple way of checking your CIBIL score for free is to get your customised Credit Health Report on Finserv MARKETS, which will provide your CIBIL score for free.
Ever considered quantifying your financial health in specific parameters, with the Credit Health Report on Finserv MARKETS?
Yes, they indeed leave a not-so-positive mark on your CIBIL score. It is considered to do so as late payments and high credit utilisation ratios are some of the telltale signs of being on rocky grounds, financially speaking, which could diminish the individual’s creditworthiness. One must always be on the lookout for such metrics.
You can raise your CIBIL score in 30 days by following below tips::
Make a big debt payment.
Reduce your credit card statement balance.
Become an authorised user.
Ask for a higher credit limit.
In order to increase your CIBIL, you can follow the following tips:
Repay credit card dues on time.
Limit credit utilisation.
Keep a check on your credit report.
Opt for different types of credit.
Increase your credit limits.
Keep old debt on your report.
Never give a hint of risk.
For most people, increasing a CIBIL score by 100 points in a month isn't going to happen but if you pay your bills on time, eliminate your debt, don't run large balances on your cards and maintain a mix of both consumer and secured borrowing, an increase in your credit could happen within months.