How to improve CIBIL Credit score?

Do your credit card, personal loan, home loan applications rejected recently? One reason for such rejection might be your low CIBIL Score. This makes your life mess as you can’t do anything immediately to improve it. But there is always solution for a problem. So even though it takes time but you will definitely can improve it.  In this post I will highlight the points which are very much important for increasing your CIBIL Score.

Improve Credit Score

1) Check CIBIL Report-Before judging anything, first apply for the CIBIL report. It usually takes 2-3 days to get it at your mail id. Once you received it then check for all your personal details like name, age, PAN Number or date of birth for it’s accuracy. If you find anything missing then report the same to CIBIL and get it first corrected.

Review your credit report 3-4 times a year. If you found anything wrong then this process of regular checking will actually alter your bad financial habit also any discrepancy in report.

Then check for loans or credit history that are named under you. If you found any discrepancy in the same then you can report it to CIBIL. This is the first step which can be easily rectified without acting on any other steps.

2) Restrict your utilization-If you have credit limit of Rs.1,00,000 then it is not a best way to utilize the whole amount. Exactly like if you are eligible for home loan of Rs.1 Cr then it does not mean that you must have all Rs.1 Cr as loan. Based on your requirement always makes sure to use less. This will improve your score. Because lower credit means lower EMI and this will easily improve your credit score.

3) Late Payment-This may one of the major reason for bad score. So always makes sure to pay your EMI or credit balance in time. Few neglect it and afterward try to bargain with credit providers. Once they settled for the amount which was lesser than total due, they feel happy that they saved something. But in reality it is really affecting their credit score.

Keeping alerts in your mobile, Google Calender or through any other means can really makes your life easier and pay within time. Also make sure that you drop the cheque before 4-5 days earlier than actual due date. Because cheque collection from bank and credit of amount to actual card provider may take time, which in return will be considered as late payment. Hence better to pay in advance if you are planning to pay through cheque.

4) Mix of Credit-Don’t over expose to any one type of credit like unsecured loans or high number of credit cards. Instead always have all credits like home loan, car loan, personal loan or credit loan. Exposing more towards unsecured loans such as credit cards or personal loans will actually give an image of negative credit history. So always utilize the mixture of secured and unsecured than over exposing towards unsecured.

5) Apply for credit with pause-Uninterrupted credit applications may actually considered as “CREDIT HUNGRY”. Instead always apply if you are actual need. If you do so then it shows that your current finance are at mess and you are desperate to get credit at any means whether it is from personal loan, car loan or utilizing the credit card. So this may harm your credit score and may be the reason for rejecting your loan application. Hence be caution while inquiring or applying for new credit.

6) Think twice before closing credit cards-It is usually believed that having too many credit cards or using all of them believed to be bad financial behavior. But at the same time having unused credit card implicate sound financial life. So think twice before closing any unused credit cards. Also closing any card with balance due may be considered as negative. So first clear the dues and think twice of closing unused cards.

7) Check co-signed or Joint Accounts-If you became the guarantor to your friend’s loan or having account with second or third holder of that credit then make sure all credit dues will be paying in time. Even though in plain it seems that you no longer a first holder or the loan applicant, bust till you being guarantor or joint account holder will actually be makes you equal responsible.

So check regularly where you as a guarantor or joint account holder of any loan accounts. Otherwise it may impact your own credit score.

8) Pay dues fully-Always try to pay your dues fully. Usually credit card send you the bill showing the minimum amount you are eligible to pay. But the remaining amount is considered as overdue which will again affect your CIBIL score. Hence always try to pay your credit card bills fully.

9) Professional Help-If you messed up in bad credit then you can seek your planner help or someone whom you feel knowledgeable in financial field. This sharing of your bad financial life may sometime give you an idea which you never thought. Hence never hide anything wrong you have about credit and share the same. Who knows your idle cash, asset or investment may makes you come out of credit :)

10) Patience is mantra-By following above rules it does not guarantee or improve your score overnight. Instead following the above rules throughout your financial life will actually improve your CIBIL score in long run and makes you a responsible person. Hence do follow above simple steps and improve your score !!!

Image courtesy of [ Stuart Miles] / FreeDigitalPhotos.net

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Comments

  1. says

    Well written. Keeping check on personal credit report and maintaining Discipline in payments definitely helps one in improving credit score.
    One more thing I would like to add is that if one is in urgency of loan, he/she may buy Credit Score from CIBIL by paying certain fee instead of waiting for the score to improve.

  2. rahul says

    I don’t understand who idiot has introduced this CIBIL. Why customer should pay Rs 250? If he want CIBIL giving wrong score [90 % time they give wrong report] Why there is no penalty CIBIL officer or to the whole department. Why financial advisories do not report anything to government regarding loot by CIBIL.
    Does Vijay Mallya or any other top 10 debts of PSU banks has any CIBIL score if not then why poor people should pay fee to these idiot peoples.

    You are taking any initiative for poor and loyal indian peoples who regularly pay there loan in case they taken loan.
    Where is our consumer protection laws.

  3. Anbu says

    Hello,
    As usual a good and useful article from you. Appreciate efforts you are taking to generate the Finance knowledge among the people

    I got the score recently and its good score (Applied after reading the article). But the details like Name, Passport are not as per the latest (Reflects details of 2006 with some spelling mistake). How to update the same

    And Few credits card which are cancelled not updated in the report. Do I need to act on this?

    In the enquiries, I saw a detail for 10 crore in 2007 from old public sector bank. What could be related to this? I haven’t made any attempt for that huge amount.
    Kindly share your view

    Regards,
    Anbu

    • says

      Anbu-Please contact CIBIL and update the same as soon as possible. Also inform about the credit cards which you cancelled but still showing in report and also about the huge detail of Rs.10 Cr. Act it immediately without any delay.

  4. Subramanian says

    Hello,

    I am a regular reader.. A friend of mine applied for a home loan for 18 lakhs. He is an NRI. But he paid his loan in 2 years in full. Apart from that he has never taken loan. Though he has a credit card..he hardly uses it. Even when he uses it, he repays the amount in next 4-5 days after the transcation reflects in his account.

    How to calculate his credit score.

    Thanks
    Subramanian

    • says

      Subramanian-You or me can’t calculate the score our self. But you need to apply to CIBIL. They will issue the score card and if any discrepancy in that then you can raise the issue.

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