7 guaranteed ways to improve your CIBIL score

Your CIBIL rating is based on your CIBIL report, which summarises your credit history. While a score that is at least 750 helps you get a loan on favourable terms, you can easily remedy a score that is less than ideal.

What is considered a good credit score?

TransUnion CIBIL is one of the four credit bureaus generating reports related to credit scores in India. CIBIL scores range between 300 and 900. The closer the score is to 900, the better it is considered. While a score between 300 and 549 is deemed to be poor, anything from 550 to 700 is deemed to be fair. Scores belonging to either category can be improved.

Focus on understanding the factors that impact your credit score and take conscious measures to improve it. You can easily increase your CIBIL Score over time if you keep at it. Take a look at seven such tactics that will help you improve your CIBIL Score.

CIBIL Score Range

Set reminders for payment and be disciplined with credit

Your repayment of outstanding debt can have a significant impact on your credit score. This is why you need to maintain discipline when it comes to paying EMIs. Delays in EMI payments force you to pay a penalty fee and lower your credit score. So, if you find that this is something that you’re guilty of, make it a point to set reminders for EMI payments so that you can tackle them on time.

Additional Read: What is loan account number (LAN)?

Ensure you maintain older credit cards to lengthen credit history

If you have old credit cards, you should continue to maintain them as long as you can pay your bills in full, on time. This will help you build a solid and lengthy credit history, which will help you increase and maintain a good credit score in the future.

Additional Read: How to check CIBIL score

Customise your credit limit

Your credit utilisation ratio has a significant impact on your credit score. The more you are able to restrict your credit usage as per the allotted limit, the better it is for your credit score. Reaching the limit has the opposite effect as it lowers your credit score. One way of tackling this is to contact your lender and customise your credit limit based on your expenses.

Opt for a longer tenor when you take a loan

When borrowing a loan, try choosing a longer tenor for repayment. This will ensure that your EMI is low so that you can make payments on time. Your credit score will improve when you don't default, delay, or skip paying EMIs.

Additional Read: Personal loan for low CIBIL score

Avoid taking on too much debt at one time

The number of loans you take in a fixed period of time should be minimal. Repay one loan and then take another to keep your credit score from crashing. If you take multiple loans at once, it may indicate that you are in a continuous cycle of insufficient funds. As a result, your credit score will fall further. On the other hand, if you take a loan and repay it successfully, it will boost your credit score.

Check your CIBIL report for mistakes and rectify them

In certain cases, CIBIL may make mistakes when updating your records, note incorrect information against your report, or delay recording details. This will also bring down your score. So, ensure that you check your CIBIL report from time to time. This will help you identify any errors and correct them by submitting a CIBIL dispute resolution form online. As a result, your credit score will improve.

Create credit history by choosing different forms of credit

If you haven’t borrowed funds in the past, you won’t have a credit history, and as a result, your CIBIL score will be low. So, ensure that you borrow a healthy mix of credit, both secured and unsecured loans, of a long and short tenor to build a strong credit score. This will help you access low personal loan interest rates and higher loan amounts in the future whenever you choose to apply for a personal loan.

These are some habits that you can weave into your life to improve your credit score over time. However, it is essential to note that these steps will not immediately change your score. After implementing them, it will take around 6 months to a year for your credit score to improve.

Additional Read: Importance of CIBIL Score For A Personal Loan

How long does it take to improve credit score

If you’re planning to take a personal loan, your credit score plays a crucial role in determining your eligibility, interest rate, and even the loan amount. But if your score isn’t where you want it to be, don’t worry—credit health can be rebuilt with consistent effort.

Here’s how you can start rebuilding your score with a personal loan in mind:

• Pay EMIs and bills on time: Timely repayment of any ongoing loans or credit card bills is one of the fastest ways to improve your credit score.
• Keep your credit utilisation low: Using only a small portion of your credit limit shows financial discipline and can boost your credit score.
• Avoid multiple loan applications at once: Each hard inquiry can pull down your score. Instead, research and apply for the most suitable personal loan.
• Don’t close old credit accounts: Length of credit history matters. Older accounts show long-term credit management and can strengthen your profile.

Improving your credit score for a personal loan is a steady process. As long as you maintain responsible financial habits, you’ll not only increase your chances of getting approved but also secure a better deal when you do.

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