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Your CIBIL score is a significant factor in determining whether you qualify for credit cards or business loans in India. Want to know how to increase your CIBIL score immediately? By maintaining and working towards a higher score, not only do you enhance your creditworthiness but also opens better financial opportunities. So, whether your current CIBIL score is 600 or lower, this article will provide strategies on how to increase it to 750, 800, or even more. Follow the strategies below on how to improve your CIBIL score and maximise your financial opportunities
Strategies to improve Your CIBIL score
While there’s no shortcut to boost your CIBIL score immediately, consistent efforts can lead to significant improvements over time. By following the strategies given below, your credit score can be improved, and you can increase access to credit facilities in the future:
Pay bills on time
According to the data from Credit Information Bureau India Limited (CIBIL), consumers with a credit score of 750 and above are around 79% in India (Source: Mirae Asset Financial Services (India) PVT. LTD, 2023). How do they do it? One simple strategy is to make timely bill payments when they’re due to improve the CIBIL score.
To ensure this, you should set up reminders on your phone or even better, set- up an auto debit from your bank. That way, your payments are always on time, and you will never miss a due date. As, delayed payments not only invite penalties but can also trigger a significant drop in your credit score.
Monitor credit report
Regularly analysing your business credit report for discrepancies is highly beneficial for individuals. It helps resolve any problems or accuracy that arise in the statements of the consumers. Apart from this, it solves the question of how to improve the CIBIL score for consumers by maintaining a clean and error-free record for them.
As per the information by RBI, Indian businesses can access a free credit report each year from the credit bureau and review it regularly to take advantage. However, they might can charge you for the full report. To check your CIBIL score for free, you can also go to Business Loans through Tata nexarc page, and click on ‘Check your CIBIL score’ for free. You can even get some business loan offers to choose from multiple lenders as per your credit score.
Reduce credit card balance
According to the Reserve Bank of India, ₹ 1.94 lakh crores was the total credit card outstanding at the end of March 2023 (Vyas, 2023). Higher balances of credit cards negatively impact the CIBIL score. Therefore, individuals must focus on how to increase the CIBIL score and restrict the utilisation of credit cards. Further, it is ideal to make payments with a credit card below 30% of its credit limit. By regularly paying off outstanding balances, consumers can experience a better change in their CIBIL score.
Maintain a better credit history
The CIBIL TransUnion Score Distribution in India has revealed that consumers having longer credit histories are liable to a better CIBIL score. The longevity of credit history is majorly important for consumers in India. Keeping older accounts active may help demonstrate creditworthiness over some time. Closing old accounts can impact the credit history, thereby, influencing the overall CIBIL score of the individual.
Diversify credit mix
The National Bank for Agriculture and Rural Development (NABARD) has explained that maintaining a diversified credit portfolio may improve your creditworthiness in the market National Bank for Agriculture and Rural Development (NABARD, 2023). Having a mix of loans, credit cards and retail accounts in a diverse credit mix is considered positive for your credit score in India. Taking unnecessary debt may lead to financial challenges which should be addressed by consumers to protect financial stability.
Settle outstanding debt
According to the guidelines of the RBI, lenders may accurately report the status of settlement for your accounts (Reserve Bank of India, 2023). It can improve your CIBIL score, if necessary, measures are adopted by the lenders. Having overdue accounts or debts in the collection is considered as a major concern in India. Consumers may focus on effectively working with their creditors to negotiate manageable settlement plans. A properly settled and managed account is always desirable for the consumers to gain the trust of the governing bodies.
Avoiding credit inquiry
RBI guidelines have explained that many inquiries in a shorter time frame may lead to financial problems. It is highly responsible for affecting the credit score of individuals, reducing their capacity to borrow money. While applying for credit in India, a serious inquiry is conducted on the credit report which is responsible for reducing your score. Individuals should focus on restricting the frequency of such credit inquiries which may affect their overall financial stability.
Closing thoughts: What’s next
- Following these strategies can be highly useful for you to improve your CIBIL score effectively.
- Maintaining better financial responsibility is essential to achieving a positive score.
- Keep your aim towards maintaining a CIBIL score of 750+ for accessing suitable financial opportunities in India.
- Increasing your CIBIL score may enhance your ability to get better opportunities to avail business loans quickly.
Also read: Can I obtain a loan without CIBIL score?