As individuals seek financing for various purposes like business ventures, medical expenses, or home management, understanding how to enhance and maintain their CIBIL score becomes crucial. Know more about the effective ways to boost your CIBIL score and maintain a healthy credit report.
Here are 10 ways that you can adopt to improve your CIBIL score:
Diversify your credit portfolio
Avoid settling your loans and/or credit cards
Limit the frequency of loan applications
Monitor your credit report
Opt for a healthy credit mix
Reduce credit risks
Request higher credit limits
Maintain old credit cards
Limit credit inquiries
Be consistent and patient
Strive for a balanced mix of secured and unsecured debts. Relying on unsecured loans too much may raise concerns for lenders, potentially impacting your CIBIL score.
Opting for settlements on loans or credit cards can harm your CIBIL score. While settling allows you to close debts for less than the actual amount, it leaves a lasting negative mark on your credit report, affecting future credit opportunities.
Limit the frequency of loan applications to maintain a healthy CIBIL score. Multiple inquiries, especially in a short period, can label you as credit-hungry, potentially lowering your creditworthiness.
Regularly review your credit report for errors or inconsistencies. Promptly rectify any inaccuracies to ensure an accurate reflection of your credit history.
Aim for a mix of secured and unsecured loans to enhance your credit history. This diversity showcases your ability to manage various credit repayments, positively impacting your CIBIL score.
Demonstrate financial stability by consistently making timely credit card payments and avoiding lower-than-due payments. This highlights responsibility and reduces the risk associated with your credit profile.
If needed, request a higher credit limit to maintain a healthy credit utilisation ratio. This responsible credit management can positively influence your CIBIL score.
Keep your old credit cards active, even if not in use. This displays a positive credit history, contributing to a higher CIBIL score over time.
Minimise hard inquiries by avoiding frequent applications for new credit lines. Excessive inquiries in a short span can adversely affect your CIBIL score.
Understand that improving your CIBIL score is a gradual process. Stay patient, be consistent in your efforts, and regularly monitor your financial actions and CIBIL score for disciplined financial management.
Now that you have understood how to improve your CIBIL score, let us look at some common factors that have a negative impact on your scores.
It can take 6 months to several years to improve your credit score. However, the time required depends on your unique circumstances such as financial habits, the initial cause for the low score and your current credit score. Therefore, it is crucial that you opt for a sustained and holistic approach to your credit score-rebuilding exercise.
While there is no fixed timeline for improving your credit score, it’s important to remember that the lower your credit score is, the longer it will take you to improve your credit score. Generally, a credit score of 750 and above is recommended to have a good chance of qualifying for loans. If your score is on the lower end and less than 600, then it will naturally take a while to increase.
Here is a table showing an estimated timeline for credit score rebuilding with regard to the various financial circumstances:
Average credit score recovery time
Defaulted or missed payment
Late mortgage payment (30 to 90 days)
Closing credit card account
Maxed credit card account
Applying for a new credit card
Now that you are aware of how to increase your CIBIL Score, use these tips to improve your CIBIL score and enjoy the numerous benefits associated with a higher score. Having a good score makes it possible for you to secure a loan at better deals and terms.
Yes, they leave a negative impact on your CIBIL score. This is because late payments and high credit utilisation ratios are some of the telltale signs of being financially unstable, which could diminish the individual’s creditworthiness.
Increasing your CIBIL score can take anywhere between 6 months and 10 years. However, employing effective strategies like making timely repayments and reducing your credit utilisation ratio can help you build your score faster.
The CIBIL score is not updated daily. Credit bureaus typically update the report once a month. To check the same, it is essential to follow your CIBIL report updates.
Here are the ways to enhance your CIBIL score:
Check your credit report regularly for updates
Raise requests to resolve the errors in your report
Assess and reduce your credit utilisation ratio
Pay your loans on time
Clear your outstanding bills
You can build your CIBIL score quickly with ease through the following ways:
Diversify your credit portfolio
Avoid loan and/or credit card settlements
Limit the number of loan and credit card applications
Monitor your credit report regularly
Make timely repayments
Reduce the credit utilisation limit
Reach out to a professional and seek consultation to get a better understanding of how to rapidly improve your CIBIL score.