CIBIL Score Improvement: Your CIBIL score acts like an academic report card for individuals from earning institutes. It tells them how serious they are with credit. Be it a home loan, personal loan, or credit card, a smooth ride can be made possible by a good CIBIL score (750+) while applying for loans. Also, it can get you lower interest rates.
However, what happens if the score is not where it should be? Worry not! Here are 5 proven tips for improving your CIBIL score and getting loans quickly without hurdles.:
Understand What a CIBIL Score Is & Why It Matters
Your score in CIBIL can possibly be between 300 and 900. This score represents your creditworthiness, or how likely you are to repay your loan on time. Banks and NBFCs check this score before offering loans.
Why is it important?
- A score above 750 increases loan approval chances.
- A poor score (600 or below) results in rejection or higher rates.
- Timely EMI & credit card payments constitute 35% of your score.
Pro Tip: The RBI’s new credit rules will now, therefore, make the improvement of scores very easy, so ensure that you are up to speed with it!
2. Control Your Credit Card Usage (30% Rule)
Maxing out your credit card? Big mistake!
How credit usage affects your score:
- Using more than 30-40% of your limit hurts your score.
- High credit utilization = Higher risk (30% weightage in CIBIL calculation).
Smart Move: Keep usage below 30%—if your limit is ₹1 lakh, spend only ₹30,000.
3. Maintain a Long & Healthy Credit History
A longer credit history = Higher trust from lenders.
Why?
- 15% of your score comes from credit age & repayment behavior.
- Older loans (paid on time) improve credibility.
Golden Rule: Don’t close old credit cards—they help build a strong credit history.
4. Choose the Right Type of Loans
Not all loans impact your score the same way!
Secured vs. Unsecured Loans:
Secured Loans (Home/Car Loans) → Boost score (lower risk for lenders).
Too many Unsecured Loans (Personal Loans/Credit Cards) → Can lower score.
Key Insight: 10% of your score depends on loan type—balance them wisely!
5. Avoid Multiple Loan Applications
Applying for too many loans in a short time? Red flag for lenders!
Why?
- Each application triggers a hard inquiry, dropping your score slightly.
- Multiple rejections = Negative impact (10% weightage).