5 important ways to increase your low CIBIL score

CIBIL or Credit Information Bureau of India Limited is a regulatory body under RBI that decides your creditworthiness. A CIBIL or credit score is calculated based on your past repayment history. It is a 3-digit numeric figure that states the condition of your credit history and whether you are suitable to avail future advances or not.

The range of CIBIL score is between 300 and 900, where 300 is the lowest, and 900 is the highest score. Financial institutions prefer applicants with a minimum credit score of 750 or higher.

There are several ways how one can build up such a credit rating; in case you do not hold the required score, here are some ways on how to increase CIBIL score that you can consider.

1. Borrow smaller amount and repay them in time

Try borrowing a smaller amount periodically and repay the dues in time to improve your CIBIL score. You will be deemed as a creditworthy borrower if you manage to repay the borrowed amount within the due date.

However, analyse your financial stability before applying for a loan or deciding your loan amount. Ideally, you should only avail a certain amount that you can repay with ease.

Moreover, check other applicable fees and charges while availing a credit. Almost all types of credits come with some form of processing fees and charges which are deducted from the principal amount. If you avail a secured loan like a loan against property, you must be aware of the additional charges associated with a loan against property.

2. Use your credit card wisely

One of the easiest methods of how to improve credit score is by careful use of your credit cards. Try paying recurrent expenses with your credit card; expenditures like utility bills, grocery, etc. usually stay within a known limit, preventing you from overspending on your card’s account.

Moreover, you also get around 30 days along with an additional 15 or 20 days as grace period within which you are required to make your payment. Paying your bills within the predetermined period helps you avoid late fees and also prevents accumulating bill amount.

3. Introduce credit mix

One of the ways of increasing credit score is to introduce various types of credit into your account. Credit bureaus are likely to consider you as creditworthy if you have availed (and successfully repaid) both secured and unsecured debts.

Availing large scale secure debts can also allow you to consolidate your debt to manage finances efficiently. You can subsume all other existing advances into one single line of credit and foreclose multiple debts, which will improve your creditworthiness.

4. Review previous instances of CIBIL discrepancies

Consider reviewing your credit score for past instances of CIBIL score fall. It will point to causes that affected the rating, things you should avoid while availing an LAP or unsecured credit, and allow you to create your budget more efficiently.

Periodically reviewing your CIBIL score can also help you locate any discrepancies that might have occurred from the credit bureau’s end.

5. Lower your credit utilisation ratio

Maintaining a low credit utilisation ratio can help improve your CIBIL score over time. Ideally, one should maintain a debt utilisation ratio below 30%; it will imply that a borrower is not credit dependent.

One should also prevent applying for credit too frequently. Lenders issue an enquiry to credit bureaus everyone you apply for an advance. Too many enquiries within a short time frame can lower your CIBIL score.

Various financial companies offer a loan against property with several benefits. Bajaj Finserv is one such NBFC that offers mortgage loans at an attractive interest rate against minimal documents.

Must Read : You can enjoy benefits like balance transfers, instant approval, hefty loan amount of up to Rs. 3.5 Crore, prolonged loan tenor of up to 20 years, online account access, etc.

They also offer you pre-approved offers that reduce the hassle of the application and saves you time. These offers are available on multiple financial products such as home loans, personal loans, business loans, etc. To take a look at your pre-approved offer, you are only required to share minimal details like your name and phone number.

Now that you know how to increase credit score you can improve your chances of availing finances without any issues. While you choose for a lender make sure that you opt for a financial institution that has a less stringent eligibility criteria and minimal documentation to ease the application process.