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Tips Through Which You Can Improve Your CIBIL Score


Tips Through Which You Can Improve Your CIBIL Score. How to Increase CIBIL Score. How to Improve your Bad CIBIL Ratings / Score?,  In this world where from the smallest bicycle loan to the loan for setting up a power plant, it is impossible to imagine existence without loans! & in order to ensure that you getting loans at a lower rate, you need to reduce the risk associated with your profile. The best way to do this is by improving your CIBIL score.

So, here we are providing you tips which if you follow, will definitely help you upon increasing your CIBIL Score.

Tips Through Which You Can Improve Your CIBIL Score

On Time, Rather Before Time:

If you have a credit card or any other instrument for which you need to make timely payments, make sure you don’t wait till the deadlines! Not just for a good credit score, this is a good habit in itself! Also, early payments are generally accompanied with some discounts! Make sure you avail all of them!

Must Read – What is credit worthiness? & how to check the creditworthiness

Avoid Defaulting:

Be it any bank loan, make sure you don’t turn it into a Non Performing Asset! Be timely on the payments of your installments & you will definitely be the favourite customer of your bank!

Don’t Over Utilize your Limits:

As far as possible, make sure you don’t overdraw. If it is very urgent, you can use it but make sure that happens rarely.

Must Read – How is Credit Rating Done?

Avoid Too Many Accounts:

Avoid too many Banks, too many accounts! Take loans only for your important needs. This will help you to keep proper track of your dues & also help in making timely payments. You will be able to manage the liquidity of funds at your disposal easily.

Think before you Guarantee It:

Even though he/ she is your childhood friend or your relative, before you agree to become a guarantor for someone, make sure you do his/ her credit analysis yourself. Have a look on his past records or his financial capability, and only if you are sure of him being credit worthy, you should proceed to sign as the guarantor. This is important because, if he defaults, even your credit score will be adversely affected, leave aside the fact that the Bank may have recovery rights against you.

Must Read – Corporate Credit Worthiness And Credit Rating

Avoid Unsecured Debts:

Even if the bankers allow you loans without primary or collateral security, make sure you don’t just take such debts blindly. Offering required amount of security to the bank is helpful & beneficially improves your credit score.

Avoid Too Many Enquiries:

The most common lacuna of most CIBIL Reports is too many enquiries in a short time. So, just don’t be credit hungry, instead try being credit worthy!

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Check your CIBIL Report:

The best person to judge you is you! So, you can get your own CIBIL Report & analyse your credit history, your credit worthiness & your credit score. Also, you will better understand the factors which are considered while forming your CIBIL score.

Here are 6 simple rules to maintain a good Credit Score

  1. Always pay your installment & charges on time – Late payments are viewed negatively by lenders
  2. Keep your balances low – Always be prudent to not use too much credit, control your utilization.
  3. Maintain a healthy mix of credit – It is better to have a healthy mix of secured (such as home loan, auto loan) and unsecured loans (such as personal loan, credit cards). Too many unsecured loans may be viewed negatively.
  4. Apply for new credit in moderation The total size of your debt reflects on your credit report and has an impact on your CIBIL TransUnion Score. Apply for new credit cautiously.
  5. Monitor your co-signed, guaranteed and joint accounts monthly – In co-signed, guaranteed or jointly held accounts, you are held equally liable for missed payments. Your joint holder’s (or the guaranteed individual) negligence could affect your ability to access credit when you need it.
  6. Review your credit history frequently throughout the year – Purchase your CIBIL TransUnion Score and Report from time to time to avoid unpleasant surprises in the form of a rejected loan application.

Must Read – Accounting for Credit Available in Respect of MAT

We are sure that if you keep the above things in mind & work upon them, you can definitely improve your CIBIL Score.

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About CA Ridhi Dhoot

The writer is a Chartered Accountant & a Licentiate Company Secretary. You can reach out to her at [email protected]

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