Many people don’t realize the importance of a CIBIL score. Your CIBIL score is like your financial report card; it reflects your creditworthiness and impacts your ability to access loans and credit cards. Whether you’re planning to buy a home, finance a car, or simply want better credit options, knowing how to increase CIBIL score is essential.
In this blog, we’ll discuss seven smart hacks to boost your CIBIL score and enhance your financial standing.
Let’s first begin by understanding what exactly is a CIBIL score.
What is a CIBIL Score?
People keep asking how to increase CIBIL score. However, first, try to understand what is a CIBIL score. Credit Information Bureau Limited Score is a three-digit numeric representation of an individual’s creditworthiness and credit history. The score is calculated based on the following things.
- Your personal credit history
- Previous credit card usage
- Previous loan repayment history and other credit details
- Any other outstanding debts and financial transactions
In India, credit scores are usually given by RBI-approved financial institutions. The major authorized credit bureaus are listed below.
1. Credit Information Bureau (India) Limited (CIBIL)
CIBIL is a well-known financial institution and a widely used credit bureau in India. It provides credit scores known as CIBIL scores to individuals. Lenders often use CIBIL scores to assess the creditworthiness of loan applicants.
Equifax is another leading credit bureau in India. It calculates credit scores based on the credit history and financial behavior of individuals. Lenders may consider Equifax scores when evaluating loan applications.
Experian is a global credit information company that operates in India. It provides credit scores to individuals and businesses. Many lenders in India use Experian scores as part of their credit evaluation process.
4. CRIF High Mark
CRIF High Mark is a credit bureau that offers credit scores and credit reports to both individuals and businesses. It is also used by lenders to assess credit risk.
Now that we have cleared the basics, let’s take a look at what score is considered a good CIBIL score.
CIBIL Score- A Detailed Analysis
You need to understand what a good score is before you know how to increase CIBIL score fast. That said, here is a complete breakdown of the score analysis.
1. 750 and above
Excellent credit score. Borrowers in this range are more likely to get approved for loans and credit cards at favorable terms.
2. 700 to 749
Good credit score. Borrowers in this range are considered creditworthy and have decent chances of loan approval.
3. 650 to 699
Fair credit score. Borrowers in this range may face some challenges in getting loans, and the terms may not be as favorable.
4. Below 650
Poor credit score. Borrowers with scores in this range may find it difficult to secure loans or credit cards, and if approved, the terms may be less favorable.
You are aware of what a good CIBIL score is. Now, let’s quickly look at how to increase CIBIL score instantly without any hassle.
How to Increase CIBIL Score- 7 Smart Tips
If you don’t know how to handle your finances, then improving your CIBIL score will be a hectic task. However, we have you covered. Here are some quick tips you can use to improve CIBIL score.
1. Pay Your Bills On Time
One of the most critical factors affecting your CIBIL score is your payment history. Consistently paying your bills on time, whether it’s credit card payments, loan EMIs, or utility bills, has a significant positive impact.
Late payments can seriously dent your score, so set up reminders or automatic payments to ensure you never miss a due date. Use the power of consistency and pay off your past dues early. This will solve the question of how to increase CIBIL score.
2. Reduce Credit Card Balances
High credit card balances relative to your credit limit can harm your CIBIL score. Paying off outstanding credit card balances not only improves your credit score but also saves you from hefty interest charges.
3. Diversify Your Credit Mix
A diverse credit mix can have a positive influence on your CIBIL score. It’s not just about credit cards; consider taking different types of loans, such as personal loans, auto loans, or home loans. However, don’t overextend yourself and only take loans when necessary.
4. Monitor Your Credit Report Regularly
Errors or inaccuracies on your credit report can negatively impact your CIBIL score. Periodically check your credit report for any discrepancies and report them to the credit bureau for correction. You’re entitled to one free credit report analysis per year from each major credit bureau.
5. Don’t Close Old Credit Accounts
Closing old credit card accounts can shorten your credit history, which can potentially lower your CIBIL score. Instead of closing them, keep those accounts open, even if you don’t use them regularly. They contribute positively to your credit history.
6. Limit New Credit Applications
Every time you apply for loans, it triggers a hard inquiry on your credit report, which can temporarily lower your CIBIL score. Avoid applying for multiple credit cards or loans within a short period. Be selective and apply only when necessary.
7. Settle Outstanding Debts
If you have defaulted on loans or credit card payments in the past, consider settling them. Negotiate with your creditors to pay off the outstanding amount in full or through a settlement arrangement. Once settled, make sure it’s updated on your credit report.
These are some of the ways that can help you to answer the question of how to increase CIBIL score.
Moving on, let’s take a look at the frequently asked questions for how to increase CIBIL scores.
FAQs – How to Increase CIBIL Score
What is a good CIBIL score?
A good CIBIL score typically ranges from 700 to 900. However, a higher score increases your chances of getting approved for loans and credit cards at favorable terms.
How can I raise my credit score in 30 days?
There is no short-term solution. Improving your CIBIL score is a gradual process and may take several months to see significant changes. Consistency in following good financial practices is key.
Is 650 a good credit score?
You will fall in the fair category. You will get loans and mortgages at higher interest rates than someone with a better CIBIL score. A good score usually starts above 690. You can follow the strategies on how to improve your CIBIL score immediately.
How to increase CIBIL score from 600 to 750?
You can check your own credit report, known as a soft inquiry. Pay off your credit card dues and past loans quickly. Keep the number of applications low and do not keep applying if your credit request has been rejected. Rectify any transaction errors and you are good to go.
Is 397 a bad credit score?
397 is significantly below the average credit score. This means that your past credit history is not that good. You have to make considerable changes to improve your score.
Improving your CIBIL score is a gradual process that requires discipline and responsible financial behavior. By following these seven smart hacks on how to increase CIBIL score, you can take control of your financial future. Remember, a high CIBIL score not only opens up more financial opportunities but also saves you money through lower interest rates. Start implementing these strategies today and watch your credit score soar.
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Founder of Sustvest
Hardik completed his B.Tech from BITS Pilani. Keeping the current global scenario, the growth of renewable energy in mind, and people looking for investment opportunities in mind he founded SustVest ( formerly, Solar Grid X ) in 2018. This venture led him to achieve the ‘Emerging Fintech Talent of the Year in MENA region ‘ in October 2019.