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How does one improve their CIBIL™ score?

You can improve your CIBIL ™ score by making certain modifications in your financial planning as below:

Pay Outstanding Credit Card Bills

You should always pay your credit card dues on time as it helps in simultaneously avoiding late payment fees and improving your credit score. Though most people have the habit of paying only the minimum amount due on their credit card, they should be aware that it entails interest and tax is added to their next billing cycle, leading to a sizeable chunk of debt. Paying the credit card dues on time saves one such debt and gives a good credit score.

Reduce Credit Utilization

Using 30% or more of your credit card limit is considered a high utilization factor that can adversely impact your credit score. Else, one could opt for an increase in their credit limit to improve their scores.

Not using your credit card also leads to a lower credit score. The prudent way to improve one’s credit score would be to limit their credit utilization to less than 30% of their credit card limit.

Avoid Multiple Credit Cards/Loans

Having multiple credit cards may help when applying for loans or making any purchases. However, it is not considered prudent to have too many credit cards at one go. One should always verify their credit eligibility before applying to multiple banks. Spending excessively on your various credit cards can also hamper your credit score. Applying for multiple credit cards/loans leads lenders to believe that you are always short on credit which can negatively impact your credit score. So, one should limit applying for multiple loans/credit cards at one time and maintain a time gap between different applications to increase your credit score.

Tracking your Credit Report

Keeping a regular track of your credit report ensures that any inconsistencies or errors in the report can be immediately reported to the concerned authority and get rectified. Otherwise, this could adversely impact your credit report.

Maintain various forms of Credit

One should be very prudent while taking credit. It is, therefore, advisable to include various forms of credit in your credit portfolio which is a fine mix of secured/ unsecured loans and short-term/long-term debt so as to time your repayments in a disciplined manner. This would also help you to improve your credit history leading to a good CIBIL ™ score.

You cannot improve your CIBIL ™ score overnight, but with careful planning and financial discipline, you can improve your CIBIL ™ score.

Additional Reading: Is it possible to improve my Credit Score?

What is CIBIL™?

CIBIL™ is one of the four main credit bureaus in India, authorized to provide a credit report that forms the basis of your credit score. Credit scores are an important criterion considered by lenders when granting loans and other financial products. Lenders judge your creditworthiness based on your past credit history. Having a good credit score entails you have better lending risk-based pricing options like lower interest rate and monthly instalments.

Why is having a good CIBIL ™ score important?

Your CIBIL™ score serves as the basis of your past creditworthiness which is a very important criterion considered by lenders before granting/approving any loans. If your credit score is low, it implies that you do not maintain financial discipline, especially with regard to the repayment of loans. This could lead to the loan not getting approved. So, having a credit score on the higher side ensures the lenders about your creditworthiness guaranteeing the timely repayment of their loans.

What are the main reasons for a low credit score?

Important reasons which could lead to a low credit score are: 

  • Incorrect personal particulars due to error on part of borrower or bank leading to CIBIL™ credit reports not being correctly updated
  • Outstanding credit card balances 
  • Having too many loans or credit cards
  • Higher credit usage of 30% or more of the credit limit sanctioned
  • Delay in repayment of loan equated monthly instalments

Additional Reading: Reasons for a low credit score

What is considered a good CIBIL™ score in India?

CIBIL ™ score ranges between 300 to 900. A score of 700 and above is considered as an excellent score that provides various benefits to the borrower - like faster loan approval, the lower rate of interest on the loan, the grant of the larger loan amount, longer loan tenure etc.

A credit ranging between 550 – 700 is considered as an average score while a score between 300 - 549 is considered as a poor score.

Additional Reading: What is the best CIBIL™ Score

How to calculate the CIBIL™ score?

To calculate CIBIL™ scores, credit bureaus consider various factors related to your loan repayment namely, payment history, length of your loan payments, loan amount, etc. They give weightage according to the fulfilment of the various factors. Calculating credit score is an ongoing process that credit bureaus conduct on a regular basis.

Additional Reading: How is the CIBIL™ Score calculated?


1. How to improve your CIBIL™ score?

  • Check Your Credit Report: Monitor your credit report regularly. This way, you will come to know about any incorrect or incomplete information or fraudulent accounts opened in your name. You can take steps to correct these mistakes. For example: In case of any incorrect or incomplete information, you can dispute it with the relevant credit bureau. This will help you improve your CIBIL™ score.
  • Keep A Low Credit Utilization Ratio: If the credit utilization ratio exceeds 30%, it will hurt your credit score. Ideally, your credit utilization ratio must be within 30%. You should limit your credit card spends accordingly.
  • Don’t Apply For Credit Repeatedly If Rejected: If you have applied for a loan or credit card and the company has rejected your application, then do not apply again for a loan or credit card. Because the lending institution will reject your application based on your low credit score and the previous rejection. The best course of action, in this case, will be to improve your credit score.
  • Don’t apply for multiple credit: when you apply for multiple credit, there are two things. One is that you will display credit hungry behaviour. The other thing is that, after you apply each time for credit, the bank will make enquiries about your credit behaviour to CIBIL™, and this gets recorded in your CIBIL™ report. Inquiries may cause the CIBIL™ score to come down.
  • Pay your outstanding loans: If there are any loans that you have not paid for a long time, then you should start with the earliest outstanding loan and pay off all your outstanding loans one by one.
  • Pay your outstanding credit card bills: you may have accumulated credit card bills by not being able to pay the bills in complete every time and just making the minimum payment. All the bills would have accumulated along with interest on the outstanding payment every time you make just the minimum payment. Clear off your credit card bill. If you have multiple credit cards, clear off all your bills starting with the earliest.
  • Have a healthy credit mix: 80% of secured loans and 20% of unsecured loans are considered to be a healthy mix of credit. It will impact your CIBIL™ score in a positive way.
  • Joint applicants should have a good CIBIL™ score: Even if your CIBIL™ score is good, if the joint applicant’s CIBIL™ score is bad, then it will hurt your credit score.

2. What are the reasons for a low CIBIL™ score due to your credit card?

  • Making only the minimum payment: making only the minimum payment will lead to the accumulation of interest on your credit card balance. At one point in time, if you just keep making the minimum payments, it may lead to an outstanding amount that exceeds your repaying capacity.
  • Exhausting your credit card limit: If you exhaust your credit card limit completely, then it is taken as credit hungry behaviour and this lowers your CIBIL™ score.
  • Not paying the credit card bill when there is a dispute
  • Credit card application refusal: if your credit card application gets rejected especially more than once, it will have a bad impact on your CIBIL™ score.

3. How do more unsecured loans affect your CIBIL™ score?

More unsecured loans affect your CIBIL™ score as they have a higher rate of interest compared to secured loans.


The 4 credit bureaus- CIBIL™, Equifax, Experian, and CRIF highmark offer credit scores in India. The points mentioned above are true for credit scores from any bureau, not just CIBIL™.

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