Improving CIBIL Score in India

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cibil score

Do you want to discover if you can improve your credit score in only a few days? Improving a credit score usually takes several months and a lot of patience. There are no fast cures for improving your credit score; instead, you must remain dedicated to making the required steps to increase your credit score. If you have a poor credit score, you may have difficulty obtaining a new credit card or obtaining a loan. Before providing you credit, almost all banks and other financial organisations do a credit check on you. Your credit score influences your creditworthiness, which might make it more difficult to have your loan application approved. Existing debt, repayment history, new credit applications, and other factors all have an impact on your credit score.

Importance & Classification of CIBIL Score

Banks mostly use your CIBIL score or credit report to assess if a person is creditworthy and hence eligible for a loan or credit card. Your credit score may have an influence on your financial commitments. The higher your credit score, the greater your chances of obtaining a credit card or a loan. If your credit application is approved, the amount of money you may borrow is still decided by your credit score. Moreover, we have classified CIBIL Score into 4 major categories that are shown in the table below:

Above 800Excellent
751-799Good
651-750Fair
300-650Very Low

The CIBIL score is divided into four categories, as shown in the table above. 

1. CIBIL Score of 800 or higher- A CIBIL score of 800 or above is considered extraordinary, and banks would most likely offer the lowest possible loan interest rate to candidates in this category. 

2. CIBIL score of 751 to 799- Anything less than 799 but above 751 is considered Good, and banks are more likely to accept the loan applications of these candidates. The banks would also offer a low interest rate to these applicants as compared to other lower categories.. 

3. Between 651 and 750- This group of applicants has a slightly lower possibility of getting a  loan application approval, and even if they do, the interest rate will be higher than the above categories. 

4. Score between 300 and 650- Applicants in this range are considered high-risk, and in most cases banks directly reject their credit applications. However, if the bank approves the credit application, then it is most likely that they will charge hefty interest rates to the applicants. 

Tips to Improve your CIBIL Score

Banks generally utilise a person’s CIBIL score or credit report to establish creditworthiness and eligibility for a loan or credit card. Your credit score may have an influence on your financial commitments. The better your credit score, the more probable it is that you will be approved for a credit card or a loan. Even if your credit application is accepted, your loan amount is still determined by your credit score. The amount of time it takes to raise your credit score is not set in stone. The lower your score, of course, the longer it will take. It normally takes 4-12 months to get 750 if your score is between 650 and 700. It will take longer if your score is less than 650. There is no easy way on how to improve CIBIL score. To reap the rewards, you must be patient, adapt your repayment habits, and be self-disciplined. The consequences of receiving a good grade endure a lifetime. However, there are a few things you may do to raise your CIBIL score:

Focus on Your Repaying Habits

Making regular and timely credit card and loan EMI payments may assist you in improving your repayment history. As a consequence, your credit score will increase. If you fail to make a credit card or loan EMI payment, your credit score will suffer. As a consequence, if you want to enhance your credit score, focus on improving your repayment habits.

Maintain Your Old Accounts

Many people believe that closing old accounts would help them improve their credit score. This is a misconception, and it is advised that past accounts be kept in order to improve one’s credit score. Credit agencies view older accounts favourably since they indicate the borrower’s long-term relationship with the lender or bank.

Use Less Credit

The credit utilisation ratio is an essential component that banks look at when determining your credit score. A credit utilisation rate of less than 30% of available credit limit is highly recommended for keeping a good credit score.

Balanced Credit Mix

Obtaining a balanced credit mix is possible by mixing secured and unsecured loans. Because secured loans are usually long-term, they assist to improve credit ratings. Because of the lengthier repayment duration of a house loan, it displays the borrower’s capacity to make regular payments over time.

The credit score generated by CIBIL (Credit Information Bureau India Limited) is known as the CIBIL Score in India, and banks use it to decide whether or not to approve your loan application. Check your credit score beforehand if you’re thinking about taking out a loan. Before asking for a loan this way, you’ll be able to know whether it’s low and has to be raised. Depending on your consistency in demonstrating favourable credit behaviour, it might take anywhere from 4 to 12 months to raise your CIBIL score.