Having a low CIBILTM score is a major hindrance to your financial future. You can face barriers while getting a mortgage, opening a credit card, getting loans, and even getting a job. Your CIBIL™ score is one of the important factors lenders take into consideration while approving your loan, because it is an indicator of your credit history and financial discipline. 

There are many reasons for your CIBILTM score being low. So, it is important to find out what’s causing the problem. It could be due to errors in your credit report or simply because of defaulting regularly on payments. It could even be because you have applied for multiple loans or credit cards.

If you have a low CIBILTM score, follow these 6 tips and see how you can improve it. 

TIP 1: Check your CIBIL™ score Before Applying For New Credit 

You should know your current financial position to improve your CIBILTM score. It is even more important when you want to apply for new credit. This is because lenders will have different requirements for the score. Tops lenders will ask for a minimum score of 750. If you don’t meet the minimal requirements, there is a probability that your loan application will get rejected.

This will make it difficult to get access to credit in the future. So, to prevent rejection and safeguard your financial future, you should get into the habit of checking your CIBILTM score before you apply. Submit a formal loan application only after you are certain of getting an approval. You can do a free credit score check on CreditMantri. 

Tip 2: Start With Paying Off High Interest Credit Cards And Loans First

Evaluate all your loans and see where you are paying the highest interest. Chalk out a financial plan to pay off high interest loans and credit cards faster. This gives you some control over other debts. You can use this time to improve your score. It will also improve your credit utilization ratio and keep it within 30% so that you don't fall into debt continuously. 

Tip 3: Make timely Payments of Your Loan EMIs and Credit Card Bills.

Defaulting on loan EMIs and credit card bills cause a dip in your credit score. Your repayment history is one of the most important factors lenders consider before deciding whether to sanction you a loan or not.

Even when one late payment can decrease your credit score considerably. So, make payments diligently. Automate your payments and set payment alerts so that you do not miss out on them.

Tip 4: Have a Healthy Credit Mix

Having different types of credit on your credit report will help in improving your CIBILTM score. Generally, there are two types of credit on your report - secured and unsecured.

Unsecured loans are easier to avail and there are more lender options to it. So, you may have more unsecured credit on your report. For a good CIBILTM score, try to maintain a healthy balance between secured and unsecured credit.

Tip 5: Request Your Lender For Loan Modification

If you are not able to pay your EMIs on time, go for renegotiating the loan terms with your lender. This is called loan remodification.

You can get a lower interest rate and a longer tenure when you go for remodification. This way, you can decrease your monthly payments and get some buffer cash every month to pay off your debts. This will improve your credit score significantly. 

Tip 6: Do Not Apply For Too Many Loans  

Do not apply for multiple credits. This will create the impression on the lender that you are credit hungry. Whenever you apply for new credit, a hard inquiry is conducted wherein the creditor will request one of the credit bureaus to look into your credit file to check how much risk you pose as a borrower. Every time a hard inquiry is conducted, your credit score dips. Also, it is not recommended to apply for any new credit or loans until you have repaired your credit score.

Tip 7: Check Your Credit Report and Keep It Error-Free

It is a good practice to check your credit report regularly. In this way, you can know about the transactions that are causing a dip in your CIBILTM score. You can fix them.

For example, if you have not paid a credit card bill due to which your score has reduced, you can settle it immediately. Also, if there are any discrepancies in any of the transactions entered in your credit report, you can file a dispute with one of the credit bureaus to get them corrected. This is certainly a good way to improve your credit score. 

What Are The Factors That Impact My CIBIL™ score?

Before you follow the tips above to improve your credit score, it is necessary to understand the various factors that influence your CIBILTM score. So, the following factors contribute to the computation of your score. 

  • Repayment behavior
  • Credit Utilization ratio
  • Current debts - loans and credit cards
  • Existing applications for credit
  • Length of your credit history
  • Credit mix - A healthy mix of credit cards, loans, and other types of credit
  • Paying only the Minimum Amount Due:

How Does CreditMantri Help You in Credit Analysis and Credit Score Improvement? 

CreditMantri helps you with detailed and in-depth analysis of your credit score and insights for credit score improvement. You can download your credit report from CreditMantri at Free Equifax® Credit Score . This report gets generated in a few minutes. It is presented in a clear and easily understandable format. Also, you can subscribe to CreditMantri’s products such as CreditFit and Credit Improvement services and get insights to enhance your credit score. So, what are you waiting for, go to the website and become credit healthy.

Conclusion

Your CIBILTM score is a 3-digit number that summarizes your financial history. It determines your creditworthiness. A good CIBILTM score will make your loan application and approval process easier and faster. That is why if your score is low, you should try to enhance it, and it will take around 4 to 12 months to improve it depending on your situation. Even more important is to maintain your CIBILTM score. Following the tips above will help you to do both. 

FAQS Want To Learn How To Improve CIBIL™ score? Try These 7 Easy Tips

1:How Can I Check My Credit Score Online? 

There are 4 credit bureaus in India. CIBIL™, Equifax, Experian, and CRIF High Mark. Every year, individuals are entitled to one free credit report and credit score from any of the credit reporting agencies. It is simple to obtain your credit report from the credit bureau.

Here's how to check your credit score.

1. Visit the official website of the credit bureau. 

2. Register and create an account on the website. 

           3. You can do this by giving your email address and mobile phone number.

4. After account creation, you must complete your profile by entering your date of birth, address, and other personal information. 

5. An OTP will be sent to your mobile and you will be asked to verify your account with the OTP.

6. After you have verified and authenticated your account, go to the 'Get Your Free Credit Report' option to obtain your credit score and credit report.

The steps are mostly the same for all four credit bureaus. The process is quick and easy. 

2:Is it good to pay off your credit card early? 

Making an early payment could help you increase your score. If you paid off the entire balance of your credit card, you can reduce your ratio to 40%. According to the consumer financial protection bureau, it is suggested to keep your debt-to-credit ratio within 30%.