A borrower’s CIBIL score is one of the first things that lenders check when they receive a loan application. It is an estimation of an individual’s creditworthiness. Scores of 750 and above are necessary in most cases to avail unsecured credits from financial institutions in India. If you possess a low credit rating, here are some ways to boost your CIBIL score.
Do not miss credit card or loan repayment dates – Delinquencies for loans or credit cards can hamper your credit scores significantly. If you use a credit card but fail to repay the outstanding bill in full each month, it will lower your ratings gradually. Similarly, if you fail to service loan EMIs on time, CIBIL scores will drop as well.
Reduce credit utilisation ratio – A simple way to boost your CIBIL score is to avoid opting for too many loans at once. If you are already servicing one, do not opt for fresh credit on top of it. Instead, clear one dept and start servicing another one. This is indicative of responsible borrowing, which eventually improves your scores.
Check for errors on the report – CIBIL scores are compiled automatically based on your transaction and credit history. However, while unlikely, there can be errors in this credit report. Thus, you should check your report at least once a year and report any errors in the score if you spot one. Rectifying such mistakes may lead to a drastic increase in scores.
Limit the number of queries – Too many queries regarding your cibil score by lenders can be construed as a credit hungry nature on your part. Ensure you only apply for a loan with one financial institution at a time. Too many applications usually result in all the lenders querying about your credit ratings simultaneously.
Your CIBIL is one of the important eligibility factors, especially for unsecured credits like personal loans. Due to the absence of collateral, lenders use this factor to determine the risk of non-payment for a particular individual.
Additional Read: Know How You Can Improve Your Cibil Score
