10 Tricks That Can Help You Improve Your CIBIL Score: A Complete Guide

Your CIBIL score can be a major reason behind the sanction or rejection of a loan. Included as part of the credit report, CIBIL score indicates the borrower’s creditworthiness based on past credit performance. Any irregularities adversely affect your CIBIL score, while regular and prompt payments increase it. Apart from sanction or rejection, a good CIBIL score can also help you negotiate better interest rates and lower costs with banks.

Now, a question might come to your mind: how can you improve your CIBIL score? Well, let’s see a few tricks for improving your CIBIL score!

Ways to Improve your CIBIL Score:

1. Timely Repayment

Repaying EMIs and dues on time is the most important thing you need to take care of, as doing this will directly help you improve your CIBIL score. If you have multiple EMIs or dues to be paid, then make sure you set reminders to ensure timely repayment.

2. Raise Error Grievances

Once in a while, you must take a look at your credit report. This is because just like any other report, your credit report too is prone to errors. Such errors may include unpaid dues even after clearing your debt, reports that have not been updated, incorrect information, etc. Without your knowledge, these errors might be pulling down your CIBIL score. So ensure you raise grievances, get your report corrected and watch your CIBIL score rise!

3. Pay Credit Card Dues on Time

Credit card companies earn most of their income from the hefty interest rates they charge their customers. Have you ever noticed the ‘minimum amount due’ column? Well, it’s only around 5% of the total amount outstanding. It might protect you from late payment or penalty charges, but it will attract huge interests and taxes that will slowly add up in the upcoming billing cycle. And before you know it, you will be stuck in a debt trap without realizing it.

Timely clearance of credit card dues and loans reflects positively on your credit report, and improves your CIBIL score. If you are running short of funds, you can always use gold loans to repay your credit card debt. Since gold loans offer far better interest rates than credit card debts, they can greatly reduce your EMI burden.

4. Avoid Taking Multiple Loans at Once

What can be worse than seeing your CIBIL credit score reduced despite you being ready to pay! Remember, many EMIs means many dates to remember. Skipping even one date can reduce your CIBIL score, even if you actually had funds to repay your loan(s). Therefore, either avoid taking multiple loans or use debt consolidation to consolidate your borrowings.

5. Limit Your Loan Inquiries

Frequently inquiring about loan eligibility and getting frequent rejections negatively affects your CIBIL score. Every loan application creates a hard inquiry, and is reflected in your credit report. Therefore, try avoiding multiple inquiries within a short period - as it reflects irregular spending habits and ineligibility.

6. Avoid Giving Hints of Risk

Your credit decisions and performance provide various hints to the bureaus. Let's take an example. If you frequently miss out on your credit card payments or pay only the minimum balance due, it indicates that your finances are stressed. Barring unavoidable situations, avoid giving these hints as much as possible.

7. Keep Regular Debts on Your Credit Report

People are often keen on removing debt from their credit reports. They miss out on that if they've been regular in paying their debts, especially ones with longer tenure, then it reflects a positive credit history. If a debt is reflected in your credit report with timely payments, it's a positive indicator of your creditworthiness.

8. Increase Your Card Limit

In this context, increasing your card limit only means increasing your borrowing power. You should not necessarily increase your expenditure in line with your credit limit. If you increase your credit card limit, your card utilisation rate reduces with the same amount of expenditure. For example, your monthly expenditure is ₹20,000. With a credit card limit of ₹50,000, your utilisation rate is 40%. If you increase your credit card limit to ₹1,00,000, your utilization rate will fall to 20%. As a rule of thumb, maintaining a utilization rate of less than 30% will help you increase your credit score.

9. Avoid Being a Joint Holder or Guarantor

Being a joint holder or a guarantor puts you in a position of responsibility, wherein any default on the applicant's part will reflect in your credit report. It will not only make you financially responsible for repaying the debt, but also negatively affect your CIBIL score.

10. Keep a Balanced Credit Portfolio

Ensure that you have a proper mix of secured and unsecured loans in your credit portfolio. While secured loans showcase stability, as you provide the bank with security - too many unsecured loans may not leave a great impression. If you have opted for personal loans, business loans, credit card loans, etc., at the same time, it’s time to consider prepaying a few of them. Adding secured loans like an auto or home loan to your portfolio will ensure a proper mix of debts, and increase your chances of getting better rates in the future.

If you want to bolster the secured aspect of your portfolio, you can easily avail a gold loan with indiagold. The entire process is completed at the most affordable rates, with an easy repayment option through the indiagold company app. As gold loans entail a shorter duration, they can help you improve your CIBIL score in no time.

Bottom Line

Your CIBIL score is an integral part of your credit history and worthiness, and financial institutions judge you based on this number. Nothing can be worse than being credible and still losing out on credit scores. Now, you can keep the above points in mind - and have better control over your credit score!