Your CIBIL score is an important factor in determining whether your credit application is approved or denied. A good credit score can make it easier to get a credit card or instant loan online, but a low CIBIL score can be a major barrier to getting credit when you need it. You can also get loans at relatively lower interest rates and credit cards with extra benefits if you have a good credit score.
Typically, lenders won’t approve credit applications from applicants with poor credit scores (600 or below). Even if a loan application is approved, the applicant will have to pay higher interest. If you want to improve your CIBIL score to become creditworthy, you should follow the points mentioned in this post.
Tips to Improve CIBIL Score
You can’t improve your credit score overnight. You’ve got to follow a few pointers regularly to improve your CIBIL score. Follow these simple steps to improve your credit score and get credit later:
Remind Yourself to Pay Off Your Loan EMIs
Your credit score gets hurt if you don’t make your loan EMI payments on time. It’s important to pay off your EMIs or credit card dues on time. If you miss or delay EMI payments, you’ll not only pay penalties but may also see your credit score fall.
It’s best to set reminders to pay on time or add Standing Instructions (SI) to your bank account so a fixed amount is deducted regularly (usually once a month).
Pay All Your Credit Card Bills on Time
It’s important to have a smart plan to pay off all your credit card debts on time. If you don’t, your credit score can be seriously affected, and if you keep missing payments regularly, your credit score may drop below 600. When you miss the due date, it shows up on your credit report in the Days Past Due (DPD) section.
If you can’t pay the full amount by the due date, try to pay at least the minimum amount required. This way, the credit card company won’t report that you didn’t pay the full amount to the credit bureau. However, keep in mind that the unpaid balance will start accumulating interest for the billing cycle. But this approach gives you another billing cycle to pay off what you owe and avoid damaging your credit score.
Check Your CIBIL Report for Errors
Even though you might have a good credit history, there are a lot of unknown errors that can hurt your score. They can be anything from incorrect personal information, wrong account details, mismatched overdue or paid-off amounts, duplicate accounts, or incorrect Days Past Due.
For example, if you’ve already paid off your instant cash loan and closed the account, but it still appears as current due because of an error at the lender’s end. You might see a big drop in your credit score. Also, keep an eye out for other errors and suspicious activity.
You can complain to CIBIL online about these errors. When you fix these errors, your credit score may go up.
Don’t Apply for Multiple Credit Cards in a Short Timeframe
There are soft and hard credit inquiries. A soft inquiry happens when you check your credit score for your information, and it doesn’t affect your credit score. On the other hand, a hard inquiry occurs when a lender or credit card company reviews your CIBIL credit report as part of your credit application.
Having an occasional hard inquiry usually doesn’t harm your credit score significantly. However, if you have multiple hard inquiries within a short period, it can signal to lenders that you’re actively seeking a lot of credit. They may interpret this as a sign of financial difficulty, which could increase the risk of you defaulting on your credit obligations.
To avoid this situation, it’s a good idea to research your options thoroughly, compare different offers, and apply to only one provider when you need a loan or credit card. If your credit score is low, and you don’t urgently need credit, consider taking steps to improve your CIBIL score before applying for credit again. This approach can help you maintain a healthier credit profile.
Avail of a Secured Credit Card
Unpaid credit accounts and late payments can lower your credit score. No lender would give a credit card or loan to such people. Before applying for the credit product, you’ll have to rebuild your credit score.
Such cases can be handled with a secured credit card. Secured credit cards don’t consider credit scores, so they’re easy to get. Using it diligently and paying your bills on time will help you rebuild your credit. You might not see results right away, but it can help in the long run.
The CIBIL score affects your ability to obtain credit cards, loans, and other financial products. Follow the above-mentioned smart tips to improve your CIBIL score. Ensure you check your CIBIL report for errors on a regular basis because even minor errors can have a negative impact on your score. Consider Fibe if your credit score is bad and you need an instant loan online. Fibe provides convenient online loan options.