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CIBIL Report
By ADITI AHUJA 1,371 views

Impact of CIBIL Score On Your Credit Report And How To Improve It

The CIBIL score is a grading of your creditworthiness – the higher it is, the higher is your creditworthiness. It is a credit rating maintained by CIBIL, one of the top 4 credit information companies in India. It is considered the topmost faction because of its partnership with more than 2,400 lenders.

The organisation provides the Credit Information Report (CIR) which consists of information like:

  • Your personal details.
  • Total amount of credit you have taken.
  • Total outstanding dues.
  • Number of delayed payment days.
  • Number of credit inquiries.

Your CIBIL or credit score is based on the CIR or credit report. It can increase or decrease based on how you handle your credit.

It is the primary parameter which every lender will consider before providing you with their financial products or services such as loans, credit cards and more. A good credit score will help you avail the lowest interest rates and most attractive terms.

So, if your CIBIL rating is low, you must first learn how to improve credit score in India. Here are some ways how!

1. Avail a Credit Card

Availing a credit card is one of the ways to improve credit score fast. Some lenders provide credit cards to individuals with a below-par CIBIL score. Proper usage of these cards with timely bill payments and a less than 30% credit utilisation can help them improve their credit history and simultaneously, their credit score.

However, these cards rarely sport the top features and benefits of premium credit cards.

You can also avail a secured credit card if you want to improve your CIBIL score while enjoying multiple lucrative features. Secured credit cards are provided against collateral, such as a fixed deposit. The credit limit will either be equal or less than the fixed deposit amount.

2. Take a Small Loan

Some financial institutions may provide you with a small personal loan even if you have a low credit score. You can manage the same to improve credit score fast.

3. Limit your Credit Applications

A lender will inquire about your credit score and report your enquiry with each application. Making multiple applications in a short span of time will showcase you as a credit-hungry individual, which will generate a negative interest from lenders. Your CIBIL will drop with every such inquiry.

Those who know how to improve credit score in India will always advise you not to make multiple applications.

4. Refrain from Repeat Applications If Rejected Once

Your score will drop a few points when your credit application gets rejected. The lender will also add a note regarding the rejection to your credit report.

A new lender will inquire for your credit score and report with an application. He/she may reject the same after seeing the previous rejection.

Multiple rejections may cause your score to drop drastically. Hence, it is recommended to wait for a few months and look for other ways to boost your CIBIL score before making another application.

5. Pay All Your Bills and EMIs Within The Due Date    

Those who know how to improve credit score in India will say that paying all your bills and EMIs within due date is one of the simplest and easiest ways to do so. Furthermore, you will also be able to avoid high interest (credit cards), late payment fees, and other charges when doing so.

6. Keep Your Credit Utilisation Under 30%

Sticking to 30% of the credit limit with your credit card can improve your CIBIL score over time. It shows that you are not a credit-hungry individual. Instead, keeping to the 30% bar displays you as an economically stable consumer, which can help you get better financial terms in the future.

Now you know how to improve credit score in India. With a high CIBIL score, your credit application will be approved faster, and lenders may additionally provide you with the best terms and benefits for future loans or credit cards.

Aditi Ahuja

Aditi Ahuja is a noted financial consultant and adviser. As she has worked with several financial organisation for many years, she has extensive knowledge in this sector. She writes on financial affairs, issues and solutions covering a broad range of topics like loans, insurance, investment and funding. Stay updated with her latest blogs.