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How to Improve Your CIBIL Score?
Posted on Monday, March 27th, 2023 | By IndusInd Bank
When you’re applying for a credit card, the most important factor that affects your approval is your CIBIL score. CIBIL score is a three-digit number that represents your creditworthiness and your repayment ability. It is an important factor that lenders consider while making a decision on approval. A high CIBIL score indicates that you are a responsible borrower who is likely to repay the loan on time. While a low CIBIL score means that you may have trouble getting a loan or a credit card.
If you are looking to improve your CIBIL score, here are some key pointers you must follow.
1. Pay Your Bills on Time
The most important factor that affects your CIBIL score is your repayment history. Late payments can severely impact your credit score, so it’s crucial to make sure you pay your bills on time. Set up payment reminders, automate payments or make a schedule to pay your bills on time.
2. Maintain a Low Credit Utilization Ratio
Your credit utilization ratio is the amount of credit you use with respect to the total available credit limit. For example, if your credit card has a limit of ₹50,000, and you have used ₹25,000, your credit utilization ratio is 50%. A high credit utilization ratio depicts you as financially unstable which can negatively impact your CIBIL score. To improve your CIBIL score, it’s essential to keep your credit utilization ratio low. It is advised to keep your credit utilization ratio under 30%.
3. Monitor Your Credit Report Regularly
Your credit report contains information about your credit accounts, payment history, and other details that lenders use to determine your creditworthiness. It’s essential to check your credit report from time to time to ensure that all the information is correct. If you notice any errors or discrepancies, you should immediately inform the credit bureau and get them corrected.
4. Keep Old Credit Accounts Active
Financial experts advice that even if your old credit accounts are no longer in use, don’t close them. Keeping your credit accounts open active for a longer time can help improve your credit score. Closing a credit account can reduce your available credit, which can increase your credit utilization ratio.
5. Avoid Making Too Many Credit Inquiries
When you apply for a loan or a credit card, the lender will mark an inquiry into your credit report. Making multiple inquiries in a short span of time can negatively impact your CIBIL score as it portrays you as a credit-hungry individual to lenders.
6. Increase Your Credit Limit
If you have a good payment history, you can ask your lender to increase your credit limit. This can help lower your credit utilization ratio and improve your CIBIL score. However, you should not use this as an opportunity to overspend.
In conclusion, improving your CIBIL score requires discipline and responsible credit behavior. By paying your bills on time, maintaining a low credit utilization ratio, monitoring your credit report, keeping your credit accounts active, avoiding too many credit inquiries, and increasing your credit limit responsibly, you can improve your credit score and enhance your chances of getting approved for loans and credit cards.
If you’re looking for a lifetime free credit card that offers amazing discount offers and rewards, IndusInd Bank has a range of options to match your lifestyle and needs. Apart from exclusive brand discounts, you also get to enjoy reward points that never expire and exquisite welcome benefits.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
