Six Ways to Improve Your CIBIL Score

When considering a Personal Loan, do not forget to consider your CIBIL score. It can often be the decisive factor. Different lending institutions have specific credit score thresholds for eligibility. In case, your score is below the required range, you might not get favourable terms. However, it does not ensure the rejection of your application. But, it can lead you to higher interest rates or lower loan amounts.

To overcome these hurdles, it is advisable to improve your score. Here are six effective ways that can help you on how to improve your CIBIL score. Let us understand them in detail:

Know What's In Your Credit Report 

The report shows how well you have managed your previous repayments. If you fail to pay your EMIs on time, the score automatically goes down.

• How to Check: You can get your CIBIL report online. Go to the official CIBIL website or other credit bureau websites, register yourself there, and by following a few steps, you can get your report.
• What to Look For: When you get your report, check the following:
• Loan and Credit Card Details: Make sure all the loans and credit cards listed are yours. If you find any discrepancies, report them immediately.
• Payment History: Look at the payment history for each loan and credit card. It should show if you've paid on time or if there were any late payments. If you see something marked late that you paid on time, that's an issue that needs to be reported.
• Outstanding Balances: Check the amounts you still owe. These should match up with your records.
• Credit Inquiries: Every time you apply for a personal loan or a credit card, it's recorded here. If you see inquiries you don't recognise, it might mean someone's trying to get credit in your name.

Pay Your Loans on Time

Paying back your loans on time is very important. It plays the most important role in improving your CIBIL or credit score and presents you as a responsible borrower.

• Use Reminders: Life's busy, and it's easy to forget things. Setting reminders for when you need to pay your loans can help you always pay on time.
• Pay Off What You Owe: If you've missed some payments, try to pay them off as soon as possible. This can help improve your score. Take up a personal loan to consolidate multiple loans into one. 

Keep Your Credit Use Low

Using too much of your available credit can make it look like you rely too much on credit. This can make your score go down.

• Don't Use Too Much Credit: Use less than or around 30% of your credit. Keep your credit utilization low as much as possible.

Don’t overborrow when taking a personal loan. Ensure your debt-to-income ratio is maintained.

Have Different Types of Credit

Different types of credit (like a car loan or a credit card) can be good for your score. It shows you can handle different types of credit.

If you're having trouble getting approved for traditional credit products, consider taking short-term loans from NBFCs that you can repay easily. Personal Loans can help improve your credit mix. It helps you repay conveniently over a relaxed tenure of up to 60 months*.

Don't Apply for Too Many Loans

Frequent loan enquiries, also known as hard enquiries, may affect your credit score. Only ask for a new loan or credit card if you really need it. Also, try to maintain some time gap between the two applications.

• Understand the Impact of Hard Inquiries: You should know the difference between hard and soft inquiries and how the former affects your CIBIL score. A soft inquiry is like casually asking for information without committing. A hard inquiry is when you formally request something, indicating a serious intention, like applying for a loan. This knowledge can help you make informed decisions when applying for new credit.
• Plan Major Credit Applications: If you anticipate needing to apply for significant credit, such as a home loan, plan your other credit applications around it to minimise the number of hard inquiries in a short period.

Conclusion 

Improving your CIBIL score requires patience, discipline, and consistency. Whether you're aiming for a personal loan for a low CIBIL score or seeking to unlock the best credit offers in the market, the steps outlined above can guide you towards a healthier financial future. With diligence and smart financial practices, you can improve your credit score. For a smooth, transparent, and reliable process, you can always trust SMFG India Credit. With their user-friendly interface and trustworthy platform, they can get you the necessary funds quickly and on time. So, get command over your finances with smart decisions.