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How Engineers Can Increase Their CIBIL Score

  • Highlights

  • Check and update your credit score

  • Build credit history with a mix of loans

  • Pay EMIs and credit card bills on time

  • Stick to the 30% credit utilisation ratio

A high CIBIL score is your password to obtaining credit easily and more affordably. Lenders and credit card companies check your CIBIL score as per the mandate by the RBI while reviewing any loan application you make. Why? Your CIBIL score reveals your past credit record. Just as wattage lets you know when an electrical system is connected to power, this three-digit CIBIL figure can tell the lender if you are the kind of borrower they can lend to—with good credit history and repayment capacity.

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Your credit score takes time to build up, and can slump if you are lax on your commitments. For example, say you have used your credit card to buy expensive materials to build solar energy panels. However, due to the delay in receivables, you weren’t able to pay back off the credit card dues in a timely manner. This mounting credit card debt lowers your credit score. Any delay in making EMI payments for existing loans has a similar effect on your score. However, there are ways you can improve your CIBIL score.

Aim for a score of 700 or above by doing the following:

1. Check your CIBIL score and report yourself and ensure it is updated

A CIBIL score is the part of a Credit Information Report (CIR), which contains the complete history of the various kinds of debts you owe to different lenders. Based on the CIR, you are assigned a CIBIL score from 300 to 900. A score of 300 to 550, for example, could mean you have many overdue payments, a score from 700 to 750 means that you are a good bet for a loan as you have been responsible with credit, and a score between 750 and 900 says that you can be highly trusted. You should, however, not be complacent with a good score. Calculation discrepancies or technical glitches can affect your CIBIL score. Check your credit score regularly by downloading a copy from the CIBIL website and keeping an updated copy. If any information is missing or incorrect inform CIBIL at once.

Additional Read: Know Bajaj Finserv Engineer Loan Eligibility Criteria

2. Use credit wisely and build a credit history

Your CIBIL score has to do with how you repay your dues. Avoid overdependence on credit cards if you aren’t sure that you will be able to repay dues on time. Also consider the type of credit you are availing. You should have more secured loans than unsecured ones. Too many unsecured loans, which do not require a collateral, can lower your CIBIL score. Also avoid going overboard with making loan applications. This also lowers your CIBIL score. Sometimes your score is low because you don’t have sufficient credit history. In such cases, take a small loan that you can confidently repay, and boost your score.

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3. Pay off overdue amounts on your credit card and loans

Remember the more outstanding dues you have accumulating by the month, the lower your CIBIL score will be. It is important to give priority to repaying EMIs on your loans on time. This will help you to obtain a higher rating on your CIBIL score. Too many missed or delayed interest payments will lower your score, and can lead your new loan application to be rejected.

4. Keep within the 30% credit utilization ratio

The 30% credit utilization ratio is a way of cleverly using the loans you have availed of in such a way that you are not spending more than what is required. The credit utilization ratio rule states that you should not utilize more than 30% of the credit you have taken. This rule should be followed even in cases where the ceiling on your credit has been raised.

Additional Read: All you need to know about Engineer Loans

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