Updated: May 30
“Your CIBIL score is like the heart rate of your financial health.”
The Credit Information Bureau Limited (CIBIL) score is one of the most important factors for determining whether or not your loan will be approved. And if approved, at what interest rate. CIBIL score ranges between 300 and 900. A low score (less than 350) may brand you as a risky customer. And more than 750 means strong creditworthiness. If a lot of damage has already been done to your credit score, then it can’t get repaired magically overnight. But that doesn’t mean it can’t be improved. There are a series of small steps you need to start taking immediately to improve it.
Here are some ways through which you can better your CIBIL score:
->Keep a tab for errors on your CIBIL report and rectify them:
First, get a copy of the report and check for errors. In certain cases, CIBIL authorities may make mistakes when it comes to updating your records. This will bring down your CIBIL score. Therefore, it is crucial to keep checking your credit report for errors every now and then. Identify such errors and correct them by submitting a CIBIL Dispute Resolution Form online.
->Pay EMIs (Equated Monthly Instalments) / bills on time:
Timely payment of bills can keep your creditworthiness intact. Timely payments on your credit health report comprise almost 35% of the total score. Delays in EMI payments don’t only force you to pay a penalty. They also lower your credit score. Make sure that you set reminders for EMI payments so that you can tackle them on time.
->Low credit utilization helps:
Try to use 30% or even less of the available credit limit on your credit card to refrain from damaging your credit score. Never ever use one single credit card to make all purchases. Also, try to limit your expense between 15-20% of your available credit limit. In that way, you can keep your repayments under control and boost your CIBIL score.
->Get a secured credit card:
Leading government and private banks offers a secured credit card against a fixed deposit of nominal amount in India. If you are thinking of applying for a new credit card, make sure the reasons are valid and upright. Applying for a lot of credit cards from multiple banks can also hurt your score.
->Foster good financial habits:
To improve your CIBIL score, start paying off old debts and loans in a timely manner. It can take as low as 1-3 months for you to start noticing an improvement in your CIBIL score. Maintain an emergency fund and start saving for the future. This way you will never miss any EMI / bill payments and have a financial backup during emergency situations.
->Improve your CIBIL rating through P2P:
Companies like OMLP2P, allow people with no CIBIL score or credit history or not so good CIBIL score to register as long as they have valid reasons for their previous CIBIL history and the ability to pay back their loans / EMIs. Borrowing money at OMLP2P is an easy and convenient process. No collateral is needed. Also, there are no prepayment charges for personal and small business loans. OMLP2P is an RBI registered NBFC P2P platform and thus repaying on time will improve your CIBIL score.
These are some habits that you can weave into your life to improve your CIBIL score over time. A high credit score indicates that one has disciplined spending and repayment habits. It is sure to boost your financial health.