6 Effective Tips to Improve Your CIBIL Score Quickly

Your creditworthiness is one of the most important deciding factors for the approval of your loan or credit application, and CIBIL plays a key role in this. Short for Credit Information Bureau (India) Limited, CIBIL is one of India’s leading credit information companies that collects and maintains records of an individual’s payments related to loans or credit cards. This information is provided by financial institutions and is used to generate the individual’s CIBIL report and score. Higher scores indicate better credit history and financial discipline, improving your chances of loan approvals and favourable interest rates. Conversely, lower scores can lead to application rejections or stricter loan terms.

If you have a lower CIBIL score, it is in your best interest to try and improve your CIBIL score before applying for finance products such as a personal loan. Let us better understand this score and see how to increase your CIBIL score through practical tips.

Steps to Improve Your CIBIL Score

Wondering how to improve your CIBIL score immediately? There are many ways to improve CIBIL scores. However, it is important to remember that doing so requires consistent effort and time. It can take anywhere from 4 to 12 months to see a significant improvement in CIBIL reports. That is why, it is essential to take steps to increase your CIBIL score sooner rather than later

Let us take a look at some actionable tips to improve your CIBIL score.

● Check and Understand Your CIBIL Report:

This is one of the first steps you can take to improve your CIBIL score. Your CIBIL report contains detailed information about your credit activities, including your payment patterns, the amount of credit you are using, and the credit inquiries you have made. Doing so will help you identify areas of improvement that need to be addressed, such as payments or high credit card balances. Then, you can take targeted action to improve your financial habits, which will lead to an increase in your CIBIL score over the long run. You can also identify any potential errors that might be affecting your score.

● Timely Payments on EMIs and Bills:

Your payment history significantly affects your CIBIL score. Ensure you pay your credit card bills, loan EMIs, and other dues on or before the due date. Late payments or defaults can drastically lower your score. Setting up reminders or automatic payments can help you avoid missing due dates. Consistently paying your bills on time demonstrates financial responsibility and reliability, which will help improve your CIBIL score over time.

● Reduce Credit Utilisation Ratio:

Another effective step to increase your CIBIL score is to maintain a low credit utilisation ratio. This ratio is the percentage of the credit used against the available limit. Ideally, you should keep your credit utilisation at or below 30%. High credit usage can indicate a higher dependency or a severe need for credit, which can negatively impact your CIBIL score. Spreading your expenses across multiple cards, requesting a credit limit increase, repaying outstanding balances in full every month, and maintaining one or two credit card accounts with a zero balance are some ways to limit the credit utilisation ratio.

● Avoid Multiple Loan Applications:

Applying for multiple loans or credit cards within a short period can have a negative impact on your CIBIL score. Each time you apply for a loan or a credit card, lenders make a hard inquiry on your credit report, which can temporarily lower your score. Multiple inquiries in a short time can indicate financial distress and reduce your creditworthiness. To avoid this, apply for credit only when necessary and only apply for the amount that is truly necessary.

● Resolve Past Due Accounts:

This measure is essential for improving your CIBIL score. If you have any past-due accounts, try to settle them as soon as possible. Outstanding debts and defaults significantly lower your CIBIL score. Work with your lending institution to come up with an alternative repayment plan or explore debt consolidation or settlement options. Once resolved, ensure that these updates are reflected in your CIBIL report. Clearing your overdue accounts can stop further reporting to CIBIL and you can start the process of rebuilding your credit history.

● Maintain a Healthy Mix of Credit:

Having a balanced mix of secured (home or car loans) and unsecured credit (personal loans or credit cards) can help improve your CIBIL score. For example, having both a credit card and a home loan can demonstrate that you can handle different types of credit responsibly. However, avoid taking on unnecessary debt just to diversify your credit mix. Focus on managing your existing credit responsibly and only apply for new credit when necessary.

Conclusion

Ensuring timely payments, limiting credit utilisation, and resolving past-due accounts are some of the most effective ways to improve your CIBIL score. Checking your credit score regularly and reviewing your credit reports for accuracy ensures that you stay on the right path to financial health.

A good CIBIL score can be a gateway to secure favourable loan terms and financial opportunities. At SMFG India Credit, you need a CIBIL score of 750 or above to apply for a personal loan. We offer loan amounts of up to INR 30 lakhs* with attractive interest rates to fuel your personal or business aspirations. Check our eligibility criteria and apply now with a 100% online application process that requires minimal documentation.