All banks are mandated by the Reserve Bank of India to evaluate each loan applicant’s CIBIL Score at the time of review. Although every lending firm has its distinct criteria for reviewing your creditworthiness, the major criteria which helps to determine the highest loan value is your CIBIL Score.
Furthermore, if you desire to obtain a loan, your lender will most likely review your CIBIL rating before deciding whether to grant your request for the loan. The 3-digit CIBIL score usually ranges from 300 to 900, denoting your creditworthiness. If you fulfil every other requirement and your CIBIL score is at least 750, you will be qualified for the best possible loan.
On the other hand, your loan offer will come with a higher interest value if your current credit rating is below 650. A low CIBIL score can also lead to a denial of your loan application. In all, there is a possibility of improving your CIBIL credit score. Read on as we present 10+ ways how to increase cibil score in a smart way.
Effective Ways To Improve CIBIL Score
You can use the following tips to improve your CIBIL Score:
1. Set Reminders For Early Repayment
Missing repayments of your housing loan in India can be a fatal error and can affect your credit score in the wrong direction. When it pertains to making EMI repayments, you must complete them without delays. In addition to the repayment penalties on late EMIs, your credit rating will also dwindle. Thus, it’s best to put reminders in place- it will aid you in repaying without missing.
2. Don’T Make Checking Your Credit Card Ratings Regularly A Habit
It’s a wrong belief that regularly checking your credit ratings can improve your CIBIL ratings. Your chances of success with this are quite low. A soft query entails checking your credit ratings online as a borrower. And in all, your CIBIL score won’t be affected by this credit query.
3. Maintain A Stable Credit Mix
Maintaining a stable balance between secured and unsecured loans is usually great. Indian lenders usually favour those who maintain more secured loans. Also, credit reporting firms usually favour individuals who have healthy credit ratings. Making timely repayments for your unsecured loans can also aid you in keeping a stable balance if you currently have a reasonable number of them.
4. Check Your Credit Report For Possible Errors
Even though you may assume that your credit rating is good, you may have some hidden errors that can potentially reduce your CIBIL credit score. Imagine the situation where you fully pay your debt, but because of an administrative error, it still appears as running debt. Thus, it would help if you regularly watch out for possible errors. Once you fix them, your rating will improve.
5. Do Not Prioritize A Joint Account
It’s best to skip setting up a joint account with anyone. This is valid because your CIBIL credit score will reduce once the other person defaults.
6. Don’t Toy With Risks
Most times, avoiding things that can harm your credit rating is a good step on how to improve your CIBIL score. Omitting repayments regularly is a major risk factor here. In all, it’s best to avoid any action that can affect your creditworthiness negatively.
7. Don’t Take Out Multiple Loans At Once
If you don’t want your CIBIL score to reduce, repaying any running debt before getting a new loan is best. Taking out multiple loans at once will make it seem like you don’t have sufficient funds to repay them. To step up your CIBIL credit rating, it’s best to apply and repay one debt at a time.
8. Monitor Your Credit Use Ratio
This is another great step on how to improve the CIBIL score in India. To begin, avoid paying for all your online purchases with your credit card. Keeping your credit card usage percentage at 30% is also best- this will greatly help to improve your CIBIL score.
9. Opt For A Longer Loan Term
Prioritise opting for a housing loan in India with a longer repayment term- it will help reduce the EMI and make it easier to repay without defaulting. In the end, you’ll also improve your CIBIL credit score.
10. Increase Your Card’S Credit Limit
Never decline a request from your Indian financial institution to step up your card’s credit limit. You can also submit an application for this. Once you have more credit limits and minimize usage, your CIBIL credit score will also significantly improve.
Conclusion
Your CIBIL credit score, which depends on your CIBIL report, is essential to your credit history. Your urgent demand for a favourable loan may be negatively affected if your CIBIL credit score is less than 750. Make sure you follow the above-mentioned ways to improve your CIBIL credit score before applying for a home loan.