9 Effective Ways To Build And Keep A Good CIBIL Score

By shalinighosh | Oct 17, 2018

Whether you’re someone who is new to the world of loans or has found yourself applying for loans every now and then, the subject of credit/CIBIL scores can be very mystifying, and even intimidating. Nevertheless, having a good credit score is super important if you’re trying to meet important money milestones in life - like moving into your first ever home or upgrading that old car. Because after all, banks use your CIBIL scores to assess whether you should have access to the best loans rates or the not-so-good ones, or even whether they should lend you any money at all!

It really does pay to know how to improve your CIBIL score works. But before jumping into some pointers, let’s first take a look at what a CIBIL score is.

What Is The Full Form Of CIBIL?

If you’ve ever wondered, the term “CIBIL” stands for Credit Information Bureau (India) Limited, the first credit information company in India, established in the year 2000. The company plays an important role in India’s money related framework.

What is a CIBIL score?

Simply put, your CIBIL score is a reflection of your credit worthiness; how reliable you are as a borrower. The better your score, the more willing lenders are to offer you a loan.

How Is Your CIBIL Score Generated?

Your CIBIL score is based on your borrowing history. Factors such as your limit utilisation rate, payment rate, length of payment history, whether your borrowing is secured, and the number of credit queries contribute to your score. Every time you take a loan, or seek a loan from a bank or NBFC, that information is passed to CIBIL and incorporated into you score. That score is then made available to all other lenders as a reference the next time you seek a loan.

How Does My CIBIL Score Affect My Chances Of Getting A Loan?

Your CIBIL score is generated in the range of 300 to 900. The closer you are to 900, the greater the confidence your loan lender/bank will have on your ability to repay the loan. Hence, the better are your chances of your loan application being approved. You’ll be willingly granted credit cards, given access to the choicest of interest and insurance rates, and will even be able to land your dream job (yes indeed, sometimes potential employers will ask to check your CIBIL scores!)   

If you have not borrowed before and thus have no credit history, your CIBIL score will show as -1.

Anything above 750 is considered to be a good CIBIL score. In most cases, if you have a score below 700, banks will be unwilling to offer you credit, particularly if the loan is unsecured. There will be some NBFCs that are more flexible, but the rates you’ll be charged will be much higher.

At NIRA, we require a minimum CIBIL score of 681 in order to approve your loans. We can also accept applications from borrowers with a -1 score.

9 Effective Ways To Improve Your CIBIL Score Quickly

By now you have a fairly clear idea that a bad CIBIL score can make things extremely difficult if you are in urgent need of money. For instance, in cases of debt repayment or medical emergencies where being approved for a loan is the only way out, the final judgement ultimately rests on how close to 900 your CIBIL score is.

But what you may still be a little foggier on is exactly how you can improve your CIBIL score. Here are some helpful tips!

1. Be Punctual

Always try to be consistent and punctual with your loan and credit card payments. This will show you’re financially responsible and that you have a good, steady flow of finances - which means less risk for the person or the bank lending you the money!

2. Bring In Some Diversity

Try and maintain a fair balance between secured and unsecured loans. Why? Because lenders like to see consumers with a history of on-time payments across different types of credit. This demonstrates responsible credit management and also helps the lender in question understand your credit risk.

3. Be Careful With Your Credit Cards

While your loan repayments would shrink your principal loan amount over time, keep an equally vigilant eye on your credit cards. Limits are meant to be adhered to, especially if they’re related to financial matters. So don’t max out your credit card too often; it won’t help boost your credibility in any way!  

4. Be A Responsible Joint Account Holder

If you are a joint holder of any bank accounts, you are equally responsible for late payments. If the joint holder of your account fails to make payments on time, it will show you in bad light as well and will end up decreasing your credit score. Lesson to be learned? Stay on top of your co-signed, joined and guaranteed accounts and constantly monitor payments to prevent your credit score from dropping.

5. Don’t Go Overboard With New Credit Application

When you take loans of limited amounts, it shows the lender that you know your repayment capacity well and are hence, unlikely to make deferred payments. If, on the other hand, you apply for too much credit, it will only increase your debt amount and will, in turn, make it look like you’ve bitten off more than you can chew.

6. Take A Small Loan

Approach the bank you hold a salary account with and ask them if you’re eligible for a loan of 50,000/- or less. This may seem counterintuitive, but small loans are easier to pay off on time and will quickly boost your credit score!

7. Get A Secured Credit Card

In case the bank you hold a salary account with refuses to give you a small loan, don’t worry. There’s yet another trick you can use. Check with them to see if they can offer you a secured credit card against a fixed deposit. Then you can start using about 30-40% of the credit limit every month and proceed to clear your repayments over time. Carrying maxed-out credit cards might be bad, but having an open credit card account with little-to-zero balances will up your reliability score and display your confidence in handling the money that has been lent to you!

8. Check Your Report For Errors

You can apply for a credit report any number of times in a year. Once you get your hands on your report, be sure to examine everything. Keep an eye out for accounts that reflect unpaid bills or late payments - because this is the information that will bring your score down. Your report is not infallible, so make sure to take the time to analyze if that information is inaccurate. If you do find errors, make sure you send your dispute in to the concerned authorities immediately.

9. Keep Revisiting Your Credit History

Always maintain a practice of reviewing your credit history every now and then. Spending some time to analyse your report every trimester should be good enough to keep your CIBIL score strong and healthy, and besides, it's completely free! 

NIRA is a new type of finance company that grants you a line of credit up to 1 lakh. The credit line is flexible, which means you can use the money for whatever you want, at interest rates that are fair to you. The application process is extremely simple and involves the following steps:

  • Fill in the required details on either our app or website to get your in-principle decision

  • Once you've qualified for credit you can go ahead and upload the required documents

  • You'll get a final approval once your documents have been verified.

  • As soon as you complete your KYC, you will be able to set up auto-debit and use your line of credit!

Don’t have a CIBIL score and are still in need of urgent cash? We’ve got you covered! NIRA welcomes people who are new to credit. However, if you do have a CIBIL score, we need a score of 681 or above in order to process your application.

Visit our website at www.nirafinance.com or simply get onto Google Play Store to download our app. Say hello to freedom!
 

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