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5 Ways to Improve Your CIBIL Score

Your CIBIL score is a 3 digit number that ranges from 300 to 900. It signifies your creditworthiness and how good are you managing your credit cards and loans.

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Updated:June 29, 2017, 6:31 PM IST
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5 Ways to Improve Your CIBIL Score
File photo of bank debit and credit cards. (Photo: Reuters/Kai Pfaffenbach)
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CIBIL stands for Credit Information Bureau India Ltd. Your CIBIL score is a 3 digit number that ranges from 300 to 900. It signifies your creditworthiness and how good are you managing your credit cards and loans. As per Reserve Bank of India (RBI) guidelines, money lending institutions need to consider your CIBIL score before approving or rejecting your application for loans and credit cards. Here are five ways to improve your CIBIL score:

Clear Dues On Time

Clearing dues on a regular basis is an important factor in calculating your credit score. Skipping EMIs and late payment of bills have a negative effect on your CIBIL score. Late payment leads to piling up of interest and would require more money to clear dues. You must pay EMIs and bills before due date.

Secured and Unsecured Loans

You need to keep your unsecured loans under check. If the number of unsecured loans (personal loans) is high, banks might reject your loan application as it is considered as a minus point. The impact on your credit score is positive when you repay your secured loans on time.

Avoid Multiple Applications for Credit

Too many applications for credit or enquiries regarding loans, credit cards etc within a short span of time indicate that you are eager for more credit. Your credit applications are recorded in your credit report. In order to improve your CIBIL score keep minimum number of credit cards and minimum applications for credits as well.

Reduce the Use of Credit Limit

If one uses more than 50% of his/her credit limit, it has an adverse effect on the score as the dependency on the credit is high. It signifies that you may have issues in the repayment of the debt. To maintain a high CIBIL score, try to limit your credit limit at 30% by not using your credit card for all purchases and use debit card to pay for some of your expenses.

Errors/Mistakes in Credit Report

Since the CIBIL score indicates the financial stability of an individual it is important to check your score at least once in every 6 months, especially if you are planning to get a home loan or any other any form of finance in the near future. If you find any discrepancies like inaccurate account balance, a loan account that has been closed but it shows active in the report, etc. get a copy of your credit report and get it corrected. You will be provided a dispute resolution form for the correction process. Once the error is rectified the credit score improves automatically.​

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