How to Improve Your CIBIL Score and Why It Matters

cibil score improvement

We know that there are parameters to check the health status of an entity. Be it physical health, automobile health or financial health! A standard parameter gives the right information as to how we are doing. So, when it comes to the financial health of an individual, then the CIBIL, formerly known as Credit Information Bureau (India) limited, gives you that vital information. It collects and records an individual’s payments related to loans and credit cards. Thus, it becomes imperative that a good score is maintained. A bad CIBIL matters a lot since it can be a nightmarish experience for those applying for loans and credits with a poor score and track record. The banks or any other financial institutions become skeptical to advance loans assuming you may default them if CIBIL report is bad!
So, if you struggle to keep an optimum score, the following ways can boost them:
Timely EMIs – If you have a big loan such as a home loan or automobile loan, then it is indeed a good opportunity to improve your CIBIL score. Such loans are usually for a longer tenure and are paid off through monthly EMIs. Thus, timely payment of these loans shall improve the score to a good extent.
Credit Cards Repayments – Many individuals use credit cards. It is good to have one in times of crisis or immediate money requirement. Credit cards come with an interest-free period, post which they impose heavy interest charges. Not paying the amount on time will lead to compounding effect and the overall amount will increase drastically. All of this impacts CIBIL score as well. Hence, it is always a good practice to repay the credit card on time. This shall ensure that CIBIL score is healthy again.
Secured Card – It may so happen that now you are in a sound financial condition and can pay money on time, but due to poor CIBIL score, your credit card application is not passing through. In such circumstances, you can opt for a secured credit card from leading banks. In a secured credit card, one can get a credit card against a fixed deposit of nominal amount. Once the card has been approved, one can use it and make the repayments on time, thereby boosting the CIBIL score.
The Rule of 30% – Credit cards are like a double-edged sword, if it can improve CIBIL score, it can also downgrade it! Many times, we may get carried away by squandering more credit card money than we can repay on time. This can cause delays in the repayment and CIBIL score goes for a toss. Thus, as a rule, do not spend more than 30% of the credit card money at one go.
Appeal – Finally, if you have been following a timely routine while repaying all the outstanding amounts to the banks and yet the score does not improve, then one can appeal at the CIBIL’s website (www.cibil.com). Errors in the score can happen, either by lenders or software bugs. So, the facility has been given to appeal. However, please note that the appeal should be on valid grounds.

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