25 Ways How to Improve CIBIL Score : Improve Credit Score

25 Ways How to Improve CIBIL Score : Improve Credit Scorehttps://themoneyvalue.com/how-to-improve-cibil-score/How to Improve Cibil Score or Credit Score. In India, we use the term "cibil score" instead of Credit Score. The same way we called Colgate instead of Toothpaste. You may have a little idea but not fully aware about what i'm talking about?

You might hard people are paying a low-interest rate or some of paying a very high interest rate. Some of very easily getting a loan or some of struggling to get the loan.  Some are darling of the banks instead some are blacklisted.

Why does all this happen? you may have idea about credit score. Did you worried about yours? did you care to find out what will be your score?

What is Credit Score?

A credit score is a three-digit number between 300 and 900. Higher the credit score better is your creditworthiness. It shows your credit behaviour. Here is a quick summary of credit score range, credit health, and risk level. A high score means ease of getting loans vs the bad score is difficult & higher interest rates.

If you have a better score, you can bargain better deal with the banks. It also shows that you have good financial knowledge. You are managing your finance in a good way. In a nutshell, your Credit Score tells financial institutions whether they can extend credit to you or not.

Also Read: Virtual credit cards for free signup Netflix & gaming.

A good Credit Score means you are a safe bet, and a bad score translates to ‘uh-oh, maybe next time’!. Bank and NBFC will be comfortable in offering you a high-value loan and credit card if your credit score is good.

Bellow is a quick summary of the credit score range, credit health, and risk level.

Credit Score Range	Credit Health	Risk Level
850 – 900	Excellent	Very Low Risk
750 – 850	Good	Low Risk
650 – 750	Fair	Moderate Risk
500 – 650	Poor	High Risk
300 – 500	Bad	Very High Risk

Who is CIBIL and Who computes Credit Score?

You must be wondering who is calculating my credit score & how they are tracking my financial transactions. CIBIL stands for Credit Information Bureau (India) Limited.  It maintains credit files on 600 million individuals and 32 million businesses. Source: Wikipedia.

There is some other credit rating agency also exist like Experian, Equifax and High Mark. Today Let’s unveil the mystery around how these companies compute your score. A good and bad credit score is determined by various factors like loan repayment history, no payment delay etc. The other agencies score also accepted but sometimes banks assigned specific rating agency. In India, CIBIL is a most used credit rating agency.

What are the Benefits of a Good Credit Score?

1. Quick Loan processing & Approval:  Your loan approval and processing will be faster if your credit score is good.


2. Instant Credit Card Approval with higher limit – Your credit card approval will be instant and faster. You will get a higher credit limit in credit cards.


3. Higher loan approval – Your chance of getting approval for higher loan amount will be higher.


4. Cheap interest rates – Bank and NBFC may offer low-interest rates if your credit score is good.


5. Higher Repayment Tenure – You may be offered higher repayment tenure by banks or credit card companies.

Now looking at above you must be thinking to check your Cibil Score. Do you know you can check CIBIL Score for free? Just Click here you will get free Credit score to offer this service. go check out your CIBIL Score first.

Now hack,  If your credit score is good you 750 or above, you need not to do anything. But, if your credit score is below 650 you should follow the steps given below to improve and boost a credit score. You also follow & keep in mind bellow step to maintain & improve your score.

25 Ways How to Improve CIBIL Score: Improve Credit Score

1. Follow Due dates, No Late payments: 

This is a very first thing you should be doing to maintain & improve the cibil score. A good payment history is very important. Follow your bill payment due dates, set a reminder on phone or calendar. A single day delay will cause you heavy penalty & interest & 35%-41% pa.

No default at all, in repayment of credit card dues. Generally, I pay 3 working days before the due date. I pay online, so if you paying by cheque at least five working days before the due date. As generally, you drop cheque into dropbox this may arise delay in the process. Therefore it is better to have a margin of safety & pay due minimum of 5 working days.

Assume, your salary is due on 7th of every month and your employer handover cheque on 7th evening i.e. Friday. Saturday and Monday is a bank holiday. Your cheque will be cleared only on 11th of that month. From an employer perspective he gave salary on 7th but from your perspective, you received it only on 11th. It is critical to making all payments on time to improve CIBIL Score.

2. Don't be credit Hungry:

I have one of my friend who carries almost Six credit card & Two personal loan. Try to close high interest paying loan first. Recently one of my reader mailed me & said his home loan is rejected due to a low credit score of his wife. Further analysing there status what i came across was shocking & there I learned the term "credit Hungry Behavior".

His wife first got job in 2015 in reputed MNC, once bank account is open she got called from 7-8 banks for credit card. As cards are free she applied for almost 7 cards. In the year 2017 she married & when they jointly applied for a loan, it got rejected. in her case, she almost missed the due dates of 4 credit cards. As she used the card & forgot pay on due date. Its a bad signal.

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It is advisable to have 2-3 credit cards. Also, don’t keep changing credit card every now & then. Pls, remember older credit card with regular payment record helps you improve CIBIL score rather new credit card. Another e.g. of credit-hungry behaviour is by availing multiple loans simultaneously like personal loan, Car loan, Education Loan etc. Ant any point you should not have more than 2 loans.

3. Be careful while using the credit card:

Most of the people use credit cards almost to 90% of its limit. In many cases, I observed the real reason why CIBIL Score hampered is over utilisation of credit card. If credit cards used wisely it is the best instrument to earn reward & plan your finances.

On average 1/3 or 20% to 30% credit utilisation is advisable to keep health score. Don't use a credit card for buying each and everything. If you have big credit limit then it's ok. But you are beginner & starting with low credit worthness. Do not use more than 30% of ur limit.

4. A mix of Secured & Un-Secured Loans:

Get a mixed bag of credit to have a healthy credit score. Please remember the Secured loan like home loan always help to improve your score. It improves your credibility in the market. You should try to minimise unsecured loan. Unsecured loan decrease your score where are secured loan improved it.

A mixture of 80% secured loan & 20% unsecured loan is a great combination. The unsecured loan includes Personal loan, Credit Card load etc.

Also Read: Best MoneyBack/ CashBack Credit Cards in India. 

5. Worth of Credit:

It is also called creditworthiness. A good creditworthiness means you are dealing with each bank. Any credit rating above 800 means you are at the Elite club. Above 700 considered good as well. Nowadays 100% loans are approved on Credit score. Therefore it better to know how to improve cibil score.

Always try to keep Credit score above 700.

6. Pay EMI within due dates:

Many times we purchase big things on Equated Monthly Installment (EMI) Payments. There is nothing bad in it. This is the way to increase your credit card score. Pay your EMI on time, If possible set the Auto debit for this. This will help in improving your track record to pay bigger amounts and thereby getting a higher CIBIL score/rating.

A good payment track record will help you to improve the score.

7. Increase the Credit Limit:

If your rating is good, a bank will offer you to increase the credit limit. Don't say no, accept it & increase the limit. Increasing limit means you do not need to spend all that money. It will automatically increase your creditworthiness. It's always better to have a high credit limit.

When your monthly spend is low with a high credit limit. It automatically increases your credit score.

8. Old is Gold, Do Not Close old Credit Card:

Generally, it is believed that if you are not using any credit card, you should close it. It is exactly the opposite happened with your credit card score. A good long credit history with well payment history always help you. Its show how maturely you behave with the credit card.

So, the crux of the matter to improve creditworthiness is that a robust repayment track record of your credit card must be continued and held on as long as possible. The longer you hold a positive credit card repayment history the better your CIBIL rating scores.

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9. Dispute inaccuracies:

Many times we disagree with banks & start a dispute with banks. As bankes also human they can do a mistake. If you find any errors in your report you can raise a dispute. It is mandatory for banks to take action on the dispute in 30 days. Once the error is resolved, it will show an improvement in your score. Do not apply for new credit without resolving old issues.

Mistakes happen; lenders can also make errors at the time of data entry. They are human too...)

10. Check Your Credit Report:

A minimum of six monthly checks on a credit report is most. Nowadays there is lot website who provides the free cibil score. Just google how to check cibil score for free, you will get thousands of results.In fact, there is one company who provides a cibil score on watsapp as well. It's easy & Simple also free.

Checking quarterly cibil score is a good habit. You can keep track of your all financial debts & moves. also after checking you can think how to improve cibil score.

11. Stop applying multiple loans or Credit Cards:

A multiple credit application shows credit hungriness. If you not sure what is credit hungriness read point 2. Just think how it looks like you are applying for a personal loan, car loan, home loan & credit cards all at together in one month.

It not a positive sign. A score will hamper because of this inquiries. Therefore before applying any loans or card think twice if you really need it? In another way, Please avoid multiple inquiries of loans to improve credit score.

12. Don’t settle loans and credit cards:

Let's take an example, Say you have 1 lakh outstanding against the credit card & you agree with bank for settling with the Rs.75000. Now you must be thinking a profit of Rs 25ooo. awesome idea right? as pay amount is decreased heavily. Wait a minute.

It is not the smart thing to do with credit cards or with any loans. It will go against you & score will be hampered.  I mean your credit card score will show "settlement".  This will not only affect your credit report  score in a negative manner but also it will be very very difficult for you to get any further loans

Lenders do due diligence before giving loans. Therefore Don’t settle loans and credit cards.

13. Avoid debt trap or keep debts at a minimum:

Borrowing is something I would say "lesser is better". People have an insane no.of loan. I mean they first buy something on credit cards to pay off credit card debt they will take a personal loan. Then we have house loan & Car loan etc. In India we have a popular saying "jitni chadar ho utna hi pair phailana chahiye"  Means imit your expenses according to your earnings.

If you can't afford it wait & earn more to afford it. Don't rush behind the loan & fancy things. A high percentage of loans shows you need more credit & your creditworthiness will be reduced.

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14. Applying for Joint Loan, be careful:

In India, we are influenced by relatives for co-application of loan. As a matter of help, we just became the co-applicant for someone else loan. What if that person defaults in loan repayment. Please remember, if they defaulted you will suffer and your credit score will decrease.

Now when you need a credit your creditworthiness is hampered because of someone else. It takes time to repair someone else fault. Therefore Watch out for joint applicants. Do your due diligence against that person.

15. Set for Auto Debit:

Many times we forgot the due dates of credit card payment. It is advisable to set auto debit for your credit cards payments.

16. Credit Cards against Fixed Deposit (Fd's) or Secured Credit Card:

When you have bad credit score & you are looking for how to improve cibil score. The best way you can do is take card against the secured fixed deposit. Get the secure credit card use it, pay your dues on time. Over period your cibil score will soars.

Banks like Axis, SBI, HDFC offers Secured credit cards. Go & try your luck.

20. Improving rating through Peer-to-Peer Platform:

In this digital era, there are lots of peer to peer lending website. Like Faircent, Lendbox, lenden club etc. all these website primarily assess your creditworthiness on Cibil score. lower the cibil score higher the rate of interest. These platforms allow people with poor CIBIL score to register on the platform as long as they have valid reasons for their credit history.

Getting a short-term loan from this website Repayment within a time limit or prepayment will improve your score. On today's article on how to improve cibil score, we almost cover 20 plus ideas.

21. Loan guarantor for others:

Again as a co-borrowing is hampered in case of default. Ths same way being a guarantor for someone else for a loan will hampered your credit score. If that person defaulted. Do your due diligence before doing such things. Always remember when your credit score decreased no one will help you. So be practical when it comes to your money.

Also Read: New EKYC Portal & how to Link Aadhar on PFO Portal. 

22. Don't pay for increasing credit score:

If you are overweight or Fat you will be darling of many gym & dietician. They will call you & try to sell their products. At the same time, if your score is bad, there are lots of agencies will call you. You will be darling of those agencies. They will tell how they can skyrocket your score & bla bla. Don't be influenced by them, It only create hole in your pocket.

Instead, follow my tips on how to improve cibil score. Your money will be saved.

23 Clean the Credit Card:

What i mean here is, show good behaviour against your Credit card. When you know something is not working in credit card Fix it. If you have big purchase on Credit card & default in payment do on EMI. If EMI too costly get the personal loan & pay the credit card debt first. In India these credit card companies charge interest almost 35% to 41% which is insane.

Fix your utilisation ratio per month. The difference between the credit utilization ratio and the debt-to-income ratio is that the credit utilization ratio is the only one that will impact your credit score.

24 Be consistent & maintain good credit History:

It takes months to come out clean or improve the cibil score. Your one mistake is sufficient to decrease your score again. Therefore once you start seeing development in your credit score don't show childish behaviour. Be maintained & truthfull with your finances.

25 Don't feel guilty & ask the bank to reverse your Late fees:

Anyways it is nothing to do with how to improve cibil score. But many people don't know they can ask bank to reverse the late fees. I have detail articel on how to reverse the late fees on credit card you can click here to read more.

Conclusion:

It's time to wrap up. In nutshell, it is not difficult to improve your credit score. If you followed discipline & patience. Increasing credit score will take a few months or year in some cases. One should be consistent & tried for best. My personal advise one should be checking at least qtr. credit card score report.

Let me know what are your ideas on how to improve cibil score in the Comment box. 

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