How to improve CIBIL score?

The need to improve the score will arise only when your CIBIL or credit score is low and you are planning to apply for a new loan or a credit card for your future endeavors. Hence, we have listed down some of the best ways that can help you solve the legit query of how to increase your CIBIL or Credit score in India –

The first thing you should be doing before you plan to go for any loan is to check your Credit score or report regularly. Checking your Credit Report is a good idea because it will tell you two things that are absolutely critical to your credit score.

First, it will show the defaults or delayed payments that have brought down your credit score.

Second, it provides information supporting the reason behind the low/high credit score. This helps in fixing the credit score. You can approach the bank to get the situation corrected.

Ideally, keeping your credit score above 750 is considered to be good, rather essential. However, it could vary with the credit score organizations as well as each bank’s benchmark.

So if your credit score is low, then it is time to start rectifying it.

Spend as much amount as you can repay within the billing date if you have any loans or credit cards outstanding. Such unpaid dues or balances on credit cards pull your score down. Paying off this amount will positively reflect on your CIBIL or credit score.

Talk to your lender and negotiate to close your loan account at the earliest.

Also, it is better to have just one or two credit cards so that it becomes easier for you to keep track of repayments. This is the most important and one of the best ways to improve your credit score fast, hence consider it prominently. Your payment history is one of the most important factors in determining your credit scores, and having a long history of on-time payments can help you achieve excellent credit scores. To do this, you’ll need to make sure you don’t miss loan or credit card payments by more than 29 days—payments that are at least 30 days late can be reported to the credit bureaus and hurt your credit scores.

Setting up automatic payments for the minimum amount due can help you avoid missing a payment (as long as you’re careful not to overdraft your bank account). If you’re having trouble affording a bill, reach out to your credit card issuer right away to try and discuss hardship options.

Your credit score is impacted negatively if you miss out on making your loan EMI payments by the due date. You need to be aware and punctual when it comes to paying off your loan EMIs or credit card dues. If the EMI repayments get missed or delayed, you not only pay the penalties but also may witness a steep fall in your credit score.

The two best ways to avoid any delay in payments are by setting reminders to repay on time or by adding Standing Instructions (SI) to your bank account from where a fixed amount shall be deducted at regular intervals (mostly on a monthly basis).

Strategically plan to clear your credit card balances by the due date. Your CIBIL score is hit significantly in case of non-payment of dues and regular defaults can easily take your credit score below 600. If you miss the due date, it is reflected in your credit report under the Days Past Due (DPD) section in your CIBIL report.

If you cannot make the complete payment by the due date, you should at least try to clear the minimum amount due so that the card provider does not report the non-payment of total dues to the bureau. Even though the remaining unpaid amount will start incurring interest for the billing cycle, you will get an additional cycle to clear off your dues and prevent your credit score from falling.

A healthy credit mix, including credit cards, installment loans, and retail accounts, can positively impact your credit score. However, only take on credit that you genuinely need and can manage responsibly.