Your CIBIL score is possibly the single most important factor that determines your eligibility for loans, credit cards, and other financial products. Your CIBIL score is a three-digit number that ranges between 300 and 900 and is calculated based on your credit history, which includes your repayment history, credit utilization, length of credit, types of credit, and recent credit inquiries.
Having a low CIBIL score can limit your financial freedom, making it challenging to get loans for education, housing, or emergencies. However, all is not lost even if you have a low score. You can take steps to improve your CIBIL score with time and effort.
In this article, you will learn how to improve your CIBIL score and achieve better financial health.
1. Check Your CIBIL Report and Score
The first step to improving your CIBIL score is to check your CIBIL report and score online. Your CIBIL report includes your credit history, loan accounts, credit card accounts, loan inquiries, and other relevant financial data. Your CIBIL score is based on this information.
Checking your CIBIL report and score helps you identify any errors or discrepancies in your credit history. Dispute any errors that you may find and get them corrected. Having errors in your credit history can harm your CIBIL score and limit your ability to get loans and credit cards.
2. Pay Your Bills on Time
Paying your bills on time is one of the most critical factors that determine your CIBIL score. Late payments can have a negative impact on your score, making it challenging to improve your creditworthiness.
Ensure that you pay your bills on time, every time. Set up automatic payments or reminders to help you stay on top of your bills. If you have missed payments in the past, work on bringing them up to date and continue paying them on time.
3. Keep Your Credit Utilization Low
Your credit utilization is the percentage of your credit limit that you use regularly. High credit utilization can have a negative impact on your CIBIL score, indicating that you rely heavily on credit and may be overextended.
As a rule of thumb, keep your credit utilization below 30% of your credit limit. If you have multiple credit cards, spread your spending across them to keep your credit utilization low.
4. Maintain a Balance of Different Types of Credit
Having a mix of different types of credit, such as installment loans, credit cards, and personal loans, can boost your CIBIL score. A good mix of credit accounts shows that you can manage different types of credit and repay them on time.
However, avoid opening too many accounts at once as this can harm your credit score. Only open new accounts when you need them and ensure that you can manage them responsibly.
5. Avoid Multiple Inquiries for Loans and Credit Cards
Applying for multiple loans or credit cards within a short period can indicate that you are credit-hungry and can cause your CIBIL score to drop. When you apply for credit, the lender makes a hard inquiry on your credit report, which can harm your score.
Instead of applying for multiple loans or credit cards, research and compare options before applying. Choose the best loan or credit card option that meets your needs, and apply only when you are confident of being approved.
Vijay Sales offers a wide range of personal loans and credit cards that can help you improve your financial health. Before applying for any of their products, research their terms and conditions, interest rates, and fees. Choose the best option that meets your needs and apply only after thorough research.
6. Maintain a Good Credit History
Maintaining a good credit history is one of the most important factors that determine your CIBIL score. Having a long credit history shows that you have a good track record of repaying loans and credit cards on time, which can boost your creditworthiness.
It is essential to maintain a good credit history by paying your bills on time, maintaining a low credit utilization, and managing different types of credit responsibly.
In summary, improving your CIBIL score requires time, effort, and patience. By taking steps to pay your bills on time, maintain a low credit utilization, and manage different types of credit responsibly, you can improve your creditworthiness and achieve better financial health.
Keep in mind that improving your CIBIL score is a gradual process, and it may take time to see visible results. However, with persistence and determination, you can achieve your financial goals and improve your financial health.