How can I improve my CIBIL score quickly?
First, it is important to remember that there is no instant quick-fix for increasing your score overnight. However, it is possible to make significant improvements to your credit score in the short run by following these tips:
- Check your Credit Report right away: The simplest and quickest thing you can do is to apply to CIBIL for a copy of your Credit Report. Note that you will have to pay for this. Check for reporting errors or any other mistaken entries that might be unnecessarily dragging down your score. (E.g. a loan you might have repaid in full but is still shown as active and probably overdue; or a loan that is wrongly reported under your name). Once you identify any errors, you should file a dispute resolution with the bureau to rectify the matter immediately. The removal of any wrong entries on your report that have a negative impact should help immediately improve your credit score.
- Limit your credit card spending to less than 50% of your limit: This will help decrease your credit utilisation ratio that is one of the factors that impacts your credit score. So for example, if your limit is Rs. 1 lakh, make sure that you do not exceed monthly expenses of Rs. 50000.
- Keep your credit card balance low: Try and maintain a low balance across your cards. A higher credit limit gives you more flexibility to make payments and keep your balances low. This will help your score.
- Do not apply for any new cards, or cancel old ones: Concentrate on improving your score with your existing cards. Applying for a new card might give you a higher credit limit but you run the risk of not being able to make timely payments on the extra spending on that card. Late or missed payments will cause your score to drop. Similarly, do not give up any existing credit cards either because this will cause your overall credit limit to drop. This will in turn have a negative impact on your score. Your immediate focus for improving your score should be to make minimum use of your existing credit cards.
- Set up payment reminders: This will help you avoid missing payment deadlines. Repayment history can account for up to 30% of your credit score so it is very important to make sure all your repayments are on time and made in full. Your bank can send you a monthly email or SMS to remind you about the payment deadline. You can also arrange to have the monthly balance paid automatically from your bank account.
It is possible to undertake all these steps in a short period of time and see a positive effect on your score.