How to Improve your CIBIL Score Immediately?
Last Updated : May 26, 2017, 12:06 p.m.
A Cibil Score is the first thing a bank enquires about before lending any loan or a credit card to the applicant. So, you must always keep a positive Cibil Score before you apply for any debt. But sometimes due to uncertainties and financial mismanagement, an individual is unable to repay the loan on time and it affects his Cibil Score. Therefore it becomes necessary for him to rebuild his Cibil Score. If you are also facing the same problem then you must know how to improve your Cibil Score immediately. We have discussed various techniques that might help you to improve your score so that you can apply for further loans easily and get a quick disbursal.
No one wants to be in a position of uncertainty. We want to be seen as responsible and diligent, especially when it comes to financial credit. When looking for credit from banks and NFBCs, a CIBIL Score is very important. Banks use credit scores to determine whether or not a person is creditworthy. A low CIBIL score can harm our creditworthiness and make it difficult to obtain credit from the Institutes. So, let’s move on to the ways that might be used for improving your Cibil Score.
Habits to opt for Improving CIBIL Score
You can improve your creditworthiness by following these steps to raising your CIBIL score.
Be Punctual and Consistent with your EMI
Try to be as consistent and punctual as possible with your EMI and credit card payments . This indicates a financial situation as well as responsible behaviour.
Keep a Balance Between Secured and Unsecured Loans
Maintaining a balance between secured and unsecured loans will help you improve the borrower image. Individuals who frequently use unsecured loans may draw attention to themselves.
Keep Credit Amount Low
Maintaining a low debt-to-income ratio is highly recommended. Though your loan repayments will reduce your loan amount over time, it is important to keep an eye on your credit card as well. Try not to exceed your credit card limit too frequently, as this may reflect poorly on your credibility.
Keep Yourself Calm While New Credit Application
When applying for new credit, try not to go overboard. A small loan amount indicates that you understand your ability to repay and then will be able to pay back the loan on time. This technique will help you to improve your CIBIL score.
Review your Credit History
A practice of periodically reviewing your credit history would be beneficial in the long run. Ensure that your credit report appropriately reflects your current financial condition.
Cibil Score Pattern by Banks
| CIBIL Score | CIBIL Score Type | Interest Rate Provided | Loan Approval(Yes/No |
|---|---|---|---|
| 700 and Above | Excellent | Lowest | Yes (easily) |
| 600 to 700 | Good | Higher | Yes |
| 300 to 600 | Poor | Higher | No |
| 1 to 5 | New Borrower (Credit history of fewer than six months) | Nominal | Yes |
| -1 | New Borrower (No credit history) | Nominal | Yes |
If the credit score is 750 or higher, banks will approve the majority of loans
All About Cibil Score
The fundamental question that the borrower has is, “What is a CIBIL score?” The CIBIL score is a credit rating with a scale of zero to 900. Credit Information Bureau (India) Limited, abbreviated as CIBIL assigns a credit score known as credit score . It reflects one’s financial capability.
If the credit score is 750 or higher, banks will approve the majority of loans. Its calculation is based on the borrower’s credit record. This includes loan or credit card payment status, as well as the amount owed. Therefore, you must keep a good Cibil Score and if it is below 700 then you must know how to improve your Cibil Score immediately.
CIBIL Score Assessment
The following four factors influence credit score computation:
- Credit Record : Any payment latency or default affects the Credit scores. As a result, being on time with your payments has a positive effect.
- Balance of secured and unsecured loans: A well-balanced mix of secured and unsecured loans helps raise credit scores.
- Inquiries received: – A lower number of loan inquiries results in a higher credit score. It reflects creditworthiness.
- Credit Utilization: A higher credit utilization harms a consumer, as it eventually reflects rising debt on a consumer over time.
Reason for Rejection of Loan Despite a Good CIBIL Score
A list of possible reasons for hesitation in your credit approval process is as below. Thoroughly consider all of the factors, make sure to address them before applying for a loan .
Too Much Credit Borrowing
The bank always questions borrowers’ credit dependency. The borrower will be a risky applicant for them. In addition, they will avoid offering a new credit amount. As banks think borrowers longing be overloaded with a new credit amount.
Any Comments on Credit Report
Any comment on the report demonstrates the applicant’s carelessness or poor reimbursement habits. As a result, it is strongly advised not to disregard the comments in a Cibil report, because banks use the applicant’s credit report before offering credit.
Instability in Current Job or Salary
If a borrower’s salary or employment is insecure, or if the organization for which he or she works is blacklisted by the bank. Besides that, if you frequently change your address or job. It will reflect negatively on your credit report.
Information Leading to Defaulter’s Information
Even if you have a good CIBIL score, your chances of getting a loan are reduced. if the defaulter’s basic credentials, such as date of birth, personal details, age, gender, jobs, and other relevant data, suit the details of the defaulter.
Tax Payments History
A person who has not filed his income tax returns on time over the last two years is more probable to have his loan application denied, even if he has a good CIBIL score.
Past Loan Rejection
Each time a new credit card is applied for, the lender obtains a credit report to verify the applicant’s credit history. If it has a history of loan rejections, your new credit application request may be rejected as well. So, after you’ve paid off all of your previous debts, apply for a new loan.
Numerous Hard Inquiries
A hard Inquiry is when a lender pulls your credit report to check your credit history. If lenders make numerous hard queries, it suggests you’ve applied for a loan multiple times, which results in a credit application rejection.
Failure to Provide Complete Financial Information
Another reason for a credit application rejection is the failure to provide complete financial information. Even if you have a great credit score, lenders always look at your financial summary, and if there is a flaw in it. The chances of your credit application rejection are significant even if the applicant has a good CIBIL score.
Failure to Confirm Details
If the bank or financial institution is unable to verify your details, such as income, address, and job evidence, it leads to loan rejection.
Age of the Candidate
The borrower loan application may be denied if the borrower’s age is more than 60 years or close to retirement. Due to the possibility of 0% creditworthiness financial institutions are cautious to issue credits to such individuals.