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Though there are plenty of factors that determine your eligibility for loans and credit cards, your credit score plays a crucial role in determining the outcome of your loan or credit card. CIBIL™ score is one of the four credit scores available in India; the other three being Equifax, Experian and CRIF High Mark.

Applicants with high CIBIL™ score are given preference while processing loan applications or credit card applications. Hence, you should always maintain a healthy credit score of 750 or more if you want to get favourable terms on your loan application or credit cards.

Can I improve a bad CIBIL™ score overnight?

Having a low CIBIL™ score is not the end of the world. You can take the right steps to improve your credit score. Disciplined credit management is important to maintain a healthy credit score. Though you cannot fix your credit score overnight, these steps will help you improve your CIBIL™ score. An average of 4-12 months to restore your credit score is a reasonable time. All you need is patience, commitment and self-discipline, and you will achieve your credit goal.

Here are a few tips to improve your CIBIL™ score: 

Do not default on payments: Keep track of all your monthly payments and ensure that they are paid on time. Defaulting on payments, even if it is a genuine omission, causes an adverse effect on your CIBIL™ score. You can use tools like auto-debit, standing instructions or NEFT mandates to make sure that the monthly EMI payments are made on time.

In case of cheque payments, make sure that you remit the cheque well before the due date to give time for the clearance period.

Check your CIBIL™ credit report regularly: Ensure to check your CIBIL™ score at regular intervals to make sure that the report is showing accurate information. If you find any errors or omissions, you can get them rectified immediately so that they don’t have any bad effect on your CIBIL™ score.

Limit your credit utilization: One of the best ways to boost your credit score is to stop using your credit card to the maximum limit. Limit your monthly credit card bill to no more than 30% to 50% of your limit. For example, if you have a credit limit of Rs. 1 lakh per month, make sure that your bill is not more than Rs. 50,000 per month. Using more than 50% of your card limit causes your credit utilisation ratio to shoot up which in turn brings down your credit scores. Also maxing out your credit card means you will have trouble with budget management and it becomes difficult to repay your credit card bill in full and on time. This is what causes your scores to decrease.

Close long-standing loans that are giving you bad credit. Having multiple liabilities on your credit report has an adverse effect on your credit score. You may choose to close down smaller, long term loans that are having a considerable impact on your credit report. Closing a pending loan balance or credit card balance brings down your overall debts, which in turn, has a positive impact on your credit score.

Avoid multiple loan/credit card applicationsin a short span of time: If you have too many credit enquiries in a short period of time, it does not bode well for your credit score. Imagine that you applied for a credit card, a personal loan, and a home loan subsequently within a few months; What does it look like to a lender? It indicates that you're hungry for credit and applying for different types of credit. This hits your creditworthiness, which in turn, brings down your credit score.

One way you can prevent a decline in your score is to stop making new credit applications within a short timeframe. This is where loan and credit card aggregators like CreditMantri come into the picture. You can use our site to shortlist the best loan and credit card offers for you. compare the features, eligibility and interest rates to zero in on the best loan or credit card offer. This way, you can avoid multiple loan applications with several lenders and instead apply to the lender only when you’re satisfied with the product.

Pay attention to your joint applicant’s spending habits: If you don’t keep an eye out for your joint applicant’s spending habits, you may bear the brunt for no fault of yours. In such a situation, if you are a joint loan application from someone else who has defaulted on payments, then you too will lose out on your CIBIL™ or credit score as reflected in your report. The only way to prevent this is to ensure that loans and cards are paid on time by all cardholders and to restrict yourself from applying for joint credit terms.

Request for an increase in your credit card credit limit: You can contact your credit card company and request an increase in your credit limit. Increasing your credit limit will allow you to manage your credit to debt ratio better without affecting your credit score.

FAQs

1. How soon can my CIBIL™ score be improved?

An average of 4-12 months to restore your credit score is a reasonable time. Though you cannot fix your credit score overnight, certain measures will make a huge impact on your CIBIL™ score. All you need is patience, commitment and self-discipline, and you will achieve your credit goal.

2. How to improve the CIBIL™ score immediately?

Though you cannot fix your credit score overnight, these steps will make a huge impact on your CIBIL™ score.

  • Check your credit score and report regularly
  • Do not default on payments
  • Limit your credit utilization
  • Reduce your debt burdens
  • Avoid multiple loan/ credit card applications in a short span of time
  • Pay attention to your joint applicant’s spending habits

3. Why should you improve your CIBIL™ score?

You should improve your CIBIL™ score to get favourable terms on your loans and credit cards. It is an important parameter assessed while processing your application for any form of credit.

4. Can I improve my credit score in 30 days?

There are a number of ways to increase your credit score in 30 days. Reducing your credit usage is one of the fastest ways to improve your credit score, and you can do so by paying down debt, spending less, paying your bill more frequently, or applying for a higher spending cap.

5. How much time will it take to boost my CIBIL™ score?

It typically takes 4-12 months to raise the credit score depending on your specific scenario. Credit scores above 750 are usually recommended. If your score is on the lower end and less than 600, it will naturally take a while to raise your score to 750. Check your CIBIL™ score regularly to find out what you are doing wrong and how you can improve it.

6. Is 650 a good CIBIL™ score?

CIBIL™ score is a rating on your credit history. It ranges between 300-900. 750+ is considered to be a decent CIBIL™ score to get competitive loans and credit cards. 650 though fair is not the best credit score. You can work on boosting your credit score to 750+.

7. Where can I check my credit score and credit report?

The credit score and credit report are calculated and provided by four credit bureaus in India, namely Equifax, CIBIL™, High Mark and Experian. You can get your CIBIL™ score directly from the CIBIL™ website for free once a year. Alternatively, you can check your credit score for free any number of times through CreditMantri. The process is very simple; You need to enter your mobile number, PAN number and a few other particulars like the name and email address. We then generate your credit score and also a detailed credit assessment for your perusal.

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