All banks today are mandated by law to check an applicant’s CIBIL score during a new application. This can be for any credit product, such as credit cards, personal loan, home loans, or car loans, which is primarily why having an adequate score is essential. The credit score validates a borrower’s ability to pay back the loan. For borrowers who unfortunately find themselves with a low CIBIL score, it is not the end of the world.
If you find yourself in the unfortunate predicament of a poor CIBIL score, here is everything you need to know on how to increase CIBIL score:
The Credit Information Bureau (India) Limited, or, popularly known as CIBIL, is a private operator that keeps a record of an individual’s and organization’s credit history. Every time credit is given to a borrower, CIBIL is notified of this transaction. Over time, CIBIL gives a score to borrowers that is calculated on their history of repayments. If a borrower has been faithful in making timely payments towards their loans, they are given a higher score. On the flip side, if payment/s have been late or, worse yet, missed, CIBIL will downgrade a borrower’s credit rating or score.
As a result, the CIBIL’s credit score is the most important factor in determining whether or not a borrower secures a loan. It is, therefore, imperative that borrowers keep their scores high to avoid a rejection of their application. A high score not only makes obtaining credit easier, it also enables the borrower to negotiate better interest rates. If you are looking to secure a loan shortly, knowing how to increase your CIBIL score immediately should be on your priority list of things to do.
One of the biggest jumps in credit score is from 600 to 750. Borrowers often find that increasing their CIBIL score is time-consuming and tedious, with very little progress to show even after multiple attempts. However, some tricks can be adopted that not only give you a higher level score but will also help you increase CIBIL score immediately.
Remember, only scores of 750 and higher are regarded as creditworthy. The most reputed lending institutions will entertain only this level of credit score. To know how to increase CIBIL score from 600 to 750 follow the steps below.
Before applying for a loan, make sure to check your credit score. There are many platforms available that offer a certain number of free credit scores for a month or a year. Getting a free credit report by visiting the websites of online lenders or NBFCs is easy and worthwhile.
Once you obtain your credit report, you will observe several crucial items that are crucial to why the score is high or low.
It will display the late payments or defaults that have lowered your credit score.
It gives information about the reason behind the low or high credit score.
This should give you an understanding of where you are lacking with your credit score. If you find that you are below the mandated score, don’t risk applying for a loan or credit product before taking the necessary measures to bring your score up to scratch.
If you are wondering about how to increase CIBIL score immediately, making sure to pay EMIs on time should be a top priority.
If you are currently paying EMIs for a car loan or home loan, make sure you are not delaying/defaulting on your repayment terms. When determining your credit ratings, CIBIL considers this to be one of the most significant factors.
A decline in your CIBIL score may derail your future dreams of acquiring a car or house, even if you have sizable savings. Maintaining your creditworthiness can be achieved by paying your EMIs on time.
Another important way to the question “how to increase CIBIL score fast” is to check for inaccuracies in your CIBIL report. If, after examining your CIBIL report, you find issues or disagree with a specific transaction, make sure to get the issue resolved immediately.
Lenders can also make mistakes. A study by PaisaBazzar shows the numerous ways a lender can sometimes get things wrong. If you feel that there may have been an error in your credit statement, file a rectification report immediately. Once the error has been rectified, you will see a reflection of that on your CIBIL credit score.
A lot of people think that having no debt on file is beneficial to their credit score. However, the lender can only determine your ability to repay loans in the future if you have a history of borrowing. As a result, pay your bills on time and use your credit card occasionally (but only if necessary) or apply for a loan. If you have good financial health, go for a short-term loan.
Furthermore, many believe that old debt accounts that they are not using anymore should be closed. While it may not be possible, you must remember that it is also a cause for a low credit score.
To understand how to increase CIBIL score from 600 to 750, having good debt is essential as it improves your credit score. The longer your history of good debt is, the better it is for your credit or CIBIL score.
A longer repayment period could result in cheaper monthly EMI payments and more cash on hand. Even while you might have to pay more interest overall, this will make it easier for you to pay off your debt each month and lower your EMI/NMI ratio.
When evaluating your loan application, lenders take into account your EMI to NMI (Net Monthly Income) ratio. If your loan is approved, a lower EMI/NMI ratio may be advantageous. If you feel you might have trouble repaying a loan, there is no harm in choosing a longer tenure.
Another crucial tip on how to increase CIBIL score fast, is to avoid multiple loan inquiries. A borrower with several loans will have many EMIs and less disposable income. It also presents you as someone who is not adept in finances.
Additionally, every time you look for new credit, a thorough investigation is conducted to assess your credit profile. These inquiries will lead to a decrease in your credit score. Hence, to maintain a steady credit score, try not to take on too many loans.
