How Can I Increase My Cibil Score Quickly?

Having a good CIBIL score is very important for everyone as the fate of approving a loan largely depends on it. CIBIL score is decided based on your credit history of loans payment in the past. A high score closer to 900 reflects good creditworthiness and a score less than 750 makes you a risky customer for the banks or money lenders. Hence, it is very important to take immediate measures to improve your CIBIL score if you have a low score.

Let’s see what the reasons are for low CIBIL score

There can be different reasons that could amount to a low CIBIL score.  A CIBIL score can come down due to mistakes made by the borrower or even due to mistakes made by the bank or lender. Let’s see what the different reasons are for a low CIBIL score.

Pending credit card dues

Some people using credit cards do not pay the whole credit card balance on due date. They pay the minimum due amount and the rest gets carried forward to next due date. This pending credit card bill reflecting in their account can have a negative impact on their CIBIL score.

High Credit Usage

If a person uses his/her credit card above 30% of the limit, then it can have a negative impact on the score. Too much usage of credit card shows high dependency on borrowed money.

Missing or delaying payment dates for loan

Missing or delaying EMI payments beyond due dates will put a red mark in your credit report. Repayment pattern is an important factor that contributes majorly in CIBIL score calculation.

Too many applications for loan or credit card

Every time a person applies for a loan or credit card, the bank puts in an enquiry for processing of the credit application. Too many enquiries reflect you as a credit hungry person which may lower the CIBIL rating.

How to increase your CIBIL Score

As we all know how much our CIBIL score is important, let’s see how we can improve our CIBIL score. If you are planning to apply for a loan and know that your CIBIL score is not up to the mark then you can do the following things that will help you increase your CIBIL score quickly.

Check your credit report for errors

You should check your credit report frequently as it will reflect your credit history and behaviour of your outstanding and cleared loans. If you find any error in the records or anomaly in the information collected, then you can appeal to CIBIL through the website to rectify it. Once the credit record gets amended with the right information you will see the change in the CIBIL score immediately.

Don’t keep reapplying for a loan if it gets rejected

Persistence is a good trait when it comes to challenges in life, but not when it comes to loan applications. Investigate why your loan is rejected and then pursue to correct the mistake before putting forward a new application. Blindly applying for multiple loans will have a negative impact on your credit report and CIBIL score as you may come across as a desperate credit hungry person. Lenders want to give loan to people who are credit worthy and can demonstrate their debt repaying capabilities. Any desperation from an applicant can flag up a red signal to the lender and they might reject the loan applications.

Restructure bad loans

One of the basic reasons for a low CIBIL score is outstanding loan payments or delayed EMI payments. If the current schedule of loan is proving a challenge for you to re-pay, then you should approach the lender/bank and re-schedule/restructure the loan to make it feasible to pay for you. This approach will help to get the delayed loan payment back on track and it will help to improve the CIBIL score.

Make full payment of credit cards due on time

Today credit cards providers are getting creative by letting you access the credit for more time. This however, comes with an interest rate. On the due date of your credit card payment, you have the option of paying the minimum amount but this will leave outstanding balance on your credit card. Leaving this outstanding balance can lower your CIBIL score. If you already have a low CIBIL score, then it is best to avoid this practise and clear all your credit card bills on time to increase your CIBIL score.

Avoid compromise by settlement of loans and credit cards dues

Lot of times when a bank account is declared NPA (Non Performing Asset), you get an option for compromise settlement. This settlement is basically bank settling the outstanding balance due at a lower amount than what is actually due. Although this will act in your favour to clear the bad loan and relieve of stress, it will have a negative remark on your credit report. If you are planning to take loans in the future or trying to improve your CIBIL score, try not to do compromise settlement. In future the banks will be hesitant to give you loan based on your history of compromise settlement of previous loan. Again this approach will not help in improving your CIBIL score. Hence, it is advised to plan your loan repayment well to avoid getting into such situations.

Keep the credit requirement to minimum

Yes, credit facility helps you to realise your dreams or goals earlier. Having said this, you should never go overboard with usage of your credit facility.  Having a lot of credit in your name can display you as a credit hungry person. Adhere to the credit of 30% of the limit to enjoy a good reputation in the CIBIL ranks. Take a loan or credit only if it necessary and not because it is available. This approach will not only help to improve your CIBIL score but also to maintain a healthy mark of over 750.

Be cautious of joint loan applicants

In this situation, your CIBIL score can suffer even if it is not your mistake. If you are joint applicant for a loan that someone else has taken and they have delayed on loan instalments then your credit rating will also suffer. Whenever you are joint applicant in a loan, ensure all the payments are done on time and there are no defaulted payments.

Conclusion

While a poor CIBIL score can have adverse affects to your financial life, the good news is that it is not the end. By following the above steps one can improve their CIBIL score and increase it to a mark where they can get access to credit again easily. Once you do improve your CIBIL score, ensure you maintain it to a good level always to enjoy the credit worthiness status at all times.