How to Improve CIBIL Score?
Your Guide to a Better Financial Future with step-by-step guidance on how to improve your CIBIL score.
The CIBIL score is a three-digit number that ranges between 0-900 and represents your creditworthiness and financial discipline. Thus it is of utmost importance that one should know how to improve their CIBIL score.
It is calculated based on your credit history, credit utilization, and payment history. Lenders use your credit score to determine whether or not to lend you money and, if so, at what interest rate. A good credit score can help you get approved for loans and credit cards at lower interest rates.
If you are looking to improve CIBIL score, there are a few things you can do.
1. Pay your bills on time. This is the most important factor in determining your CIBIL score. Ensure the timely payments of your bills every time.
2. Keep your credit card balances low. High credit card balances can hurt your CIBIL score. Try to keep the outstanding balance on your credit card below 25-30% of the credit limit. It would be great if the total outstanding can be paid in full every month. This would not just improve the credit score but also help in saving enormous interest credit card company charges.
3. Apply for new credit card or loan only when you need it. Every time you apply for a new credit card or loan, it can hit your CIBIL score negatively.
4. Monitor your credit report. You can get a free copy of your credit report from each of the four major credit bureaus (Equifax, Experian, Highmark Crif & TransUnion CIBIL) once a year. Review your credit report periodically for any errors and raise a dispute in case of a reporting error. Also there are several websites like Paisabazaar and BankBazaar which offer free credit reports.
5. Build a good credit history. If you have a limited credit history, you can start building it by getting a secured credit card or taking out a small loan. The loan could a Gold Loan or any secured loan.
Here are some additional tips on how to improve CIBIL score:
- Get a credit monitoring service. A credit monitoring service can help you track your credit score and alert you to any changes.
- Consider a credit builder loan or credit card. A credit builder loan or credit card is a type of loan that helps you build credit by reporting your payments to the credit bureaus.
- Get yourself added as an authorized user on someone else’s credit card. This can help you build credit if you don’t have any credit history.
Improving your credit score takes time and effort, but it is worth it in the long run.
By following these tips, you can improve your financial health and get better deals on loans and other financial products.
What is a CIBIL Score?
Your CIBIL score is a three-digit number that represents your creditworthiness. It is calculated based on five key factors:
Payment history (35%): This is the most important factor in your CIBIL score. It looks at your history of paying bills on time, including credit cards, loans, and other lines of credit.
Credit utilization (30%): This is the amount of credit you are using compared to the amount of credit you have available. For example, if you have a credit limit of ₹50,000 and you are using ₹25,000, your credit utilization is 50%.
Length of credit history (15%): This is the length of time you have had credit accounts open. The longer your credit history, the better your CIBIL score.
Credit mix (10%): This is the types of credit you have, such as credit cards, loans, and installment loans. Having a mix of different types of credit can help your credit score.
New credit (10%): This is how many new credit accounts you have opened recently. Opening too many new accounts at once can hurt your CIBIL score.
How to Check Your CIBIL Score?
You can check your CIBIL score for free from a number of different sources. Here are a few options:
CIBIL website: You can get a free copy of your CIBIL score from the CIBIL website.
Credit card companies: Many credit card companies offer free CIBIL score monitoring to their customers.
Credit monitoring services: There are good number of credit monitoring services that offer free or paid CIBIL score monitoring.
**Conclusion**
Improving your CIBIL score takes time and effort, but it is worth it in the long run. By following these tips, you can improve your financial health and get better deals on loans and other financial products.
Additional Resources
I hope this blog post has been helpful. If you have any questions, please feel free to leave a comment below.
Please note: This blog post is for informational purposes only and should not be construed as financial advice. Please consult with a financial advisor before making any financial decisions.
