How To Improve Your CIBIL Score: A good CIBIL score is important when you want to get a loan or credit card at favourable terms. Banks and financial institutions use your credit score to assess your creditworthiness and repayment behaviour. In India, a CIBIL score generally ranges from 300 to 900, and a score of 750 or above is usually considered good. A higher score can improve your chances of loan approval and may help you negotiate better interest rates.
If your CIBIL score is low, don’t worry. It can be improved gradually by adopting responsible credit habits. Here are some practical ways on How to improve your CIBIL score.
1. Pay EMIs and Credit Card Bills on Time
Your repayment history is one of the most important factors affecting your credit score. Late payments, missed EMIs or overdue credit card bills can negatively impact your score.
Always pay your EMIs and credit card bills before the due date. Setting up automatic payments or reminders can help prevent accidental delays.
2. Keep Credit Card Utilisation Low
Credit utilisation refers to the percentage of your available credit limit that you are using. For example, if your credit card limit is ₹1 lakh and you regularly use ₹80,000, your utilisation is 80%.
A consistently high utilisation ratio may indicate that you are overly dependent on credit. Try to keep your credit utilisation below 30% of the available limit, wherever possible.
3. Avoid Applying for Too Many Loans or Credit Cards
Every time you apply for credit, the lender may make a hard enquiry on your credit report. Multiple applications within a short period can make you appear credit-hungry and may negatively affect your score.
Therefore, apply for a new loan or credit card only when you genuinely need it.
4. Maintain a Healthy Credit Mix
Having a balanced combination of secured and unsecured loans can demonstrate your ability to manage different types of credit. Home loans and vehicle loans are examples of secured credit, while personal loans and credit cards are unsecured credit.
However, you should never borrow money simply to create a credit mix. Take credit only according to your financial requirements and repayment capacity.
5. Don’t Close Old Credit Accounts Unnecessarily
A long and healthy credit history can support a better credit profile. If you have an old credit card with a good repayment record, closing it unnecessarily could reduce the length of your credit history and available credit.
If there is no significant cost associated with maintaining the account, consider keeping it active and using it responsibly.
6. Check Your CIBIL Report Regularly
Errors in your credit report can affect your CIBIL score. Check your credit report periodically and look for incorrect personal information, accounts that do not belong to you, wrongly reported late payments or loans that have already been closed.
If you identify an error, raise a dispute with the concerned credit bureau or lender and get it corrected.
7. Pay Outstanding Dues
If you have overdue loans or credit card payments, prioritise clearing them. Although paying an overdue amount does not instantly increase your CIBIL score, maintaining a clean repayment record going forward can gradually improve your credit profile.
How Long Does It Take to Improve a CIBIL Score?
Improving a CIBIL score is a gradual process. There is no fixed period in which a score will increase by a specific number of points. It depends on factors such as your existing score, repayment history, outstanding debt, credit utilisation and recent credit applications.
The key is to maintain disciplined financial behaviour consistently.
Conclusion
Improving your CIBIL score is mainly about responsible credit management. Pay your bills and EMIs on time, keep credit utilisation under control, avoid unnecessary loan applications, maintain a healthy credit history and regularly check your credit report. With consistent financial discipline, your credit profile can gradually become stronger, increasing your chances of obtaining loans and credit at better terms.
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