How Long it Takes to Improve CIBIL Score

Your credit score is one of the most important factors that determine your creditworthiness, especially when availing a loan. A good credit score will make your loan application process simpler and quicker. It is best to check your credit score well in advance so that if it is low, you have enough time to improve it before sending in your loan application. To improve credit score it usually takes anywhere from 4-12 months depending on your individual situation. The closer your score is to 750, the less time it will take to improve your credit score. If your score is on the lower end and less than 600, then it will naturally take a while to increase your score to 750.

What is the Purpose of CIBIL Scores?

Your CIBIL score is derived using the credit history found in the CIBIL Report. It is also known as CIR i.e (Credit Information Report). A CIR contains an individual’s credit payment history across loan types and credit institutions. A CIR is most often used by banks and financial institutions to evaluate loans and credit card applications. To understand it better here are some of the purposes of a CIBIL Score.

  • The loan approval process:

To fasten the pace of the loan process you need to have a good credit score. It is one of the primary checks done by the lenders when evaluating your credit profile. You could say it is the first financial impression the lender will have of you and it will also help them decide whether you are eligible to avail a loan.

  • A CIBIL Score determines your loan amount or credit limit:

Lenders look at the CIR not only in deciding whether or not to extend credit but also while determining your loan amount/ credit limit. If the lenders consider that half of your income is used for living expenses, the credit eligibility (Cr) of individuals with existing loans will be half of their income (I) minus current EMI. So Cr = I/2 – EMI. An individual with Rs. 50,000 income and existing EMI of 10,000 may be sanctioned a loan amount for a maximum additional EMI of Rs. 15,000; i.e., Rs. 50,000/2 – Rs. 10,000 = Rs. 15,000.

  • Manages your existing relationship with the bank:

Banks and financial institutions run a check at your CIR periodically to check your credit health in order to offer better services to you.

  • Telecom operators:

Telecom operators keep looking at your CIBIL Score and the CIR to determine the credit limit that can be granted to you if you are a post-paid mobile subscriber.

Important measures that help to improve your credit score

The following are some of the important measures on how to improve CIBIL score

Get your credit report immediately

You can simply run a check through your credit report and look for any errors and are unnecessarily dragging down your credit score down. It is important to report any error or suspicious activity and get it corrected, this will have an immediate effect on your credit score.

Make sure you pay your bills on time

Timely payments of credit card bills and loans will significantly improve your credit score. On the other hand, a payment default will drag the score down. So, start making your payments in time and you'll begin to see improvements in your score.

Do not apply for multiple loans or credit cards at the same time.

When you apply for multiple loans at the same time you are seen as credit hungry in the eyes of the lenders. The lenders start to question your ability to repay the loan which may ultimately result in rejection of your loan application.

Now that you’re well aware of how to increase CIBIL score, use these tips to improve your 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 various offers like requirements. They also personalized pre-approved offers, instant approval, and quick disbursal of loans. Another simple way of checking your CIBIL score for free is to get your customized Financial Health Check Report (FHCR) on Finserv MARKETS. A Financial Health Check Report (FHCR) will provide your CIBIL score for free, at no extra cost. You can get the most attractive interest rates and complete transparency with no hidden charges on your loan.

 

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