Your CIBIL Score is an important factor when it comes to a lender approving or rejecting your application for a loan. While you can get approval on loans such as a personal loan with a low CIBIL Score, it is in your best interest to apply once you improve it. A good score will help you get an instant personal loan at lower interest rates. So, here are 5 ways to give your CIBIL Score a boost.
5 steps to improve your credit score
- Clear all your existing debt
- Pay your EMIs on time
- Limit your credit utilisation
- Report discrepancies in your credit report, if any
- Borrow a mix of credit
Clear all your existing debt
Having outstanding debt is noted on your CIBIL report, and until you repay it, will negatively impact your CIBIL credit score too. So, it is essential that you clear outstanding debts to boost your score. To do this, repay your debt within your chosen timeline or make prepayments to foreclose your loan. Using credit responsibly will improve your score.
Additional Read: Personal loan for low CIBIL score
Pay your EMIs on time
Making EMI payments isn’t enough. If you don’t make payments on time, it will pull down your CIBIL credit score. Delayed EMI payments are noted in your CIBIL report and include details of the number of days of delay. Here, the best thing to do is to set up an automatic transfer from your bank account to facilitate timely payment. Then, be sure that your account has enough funds to allow the transfer. This will ensure that you don’t incur a bounce charge and will improve your CIBIL Score too.
Limit your credit utilisation
Utilising too much credit shows lenders that you are unable to live in line with your income. So, while utilising credit, it is crucial to stay below the limit. It is also important that you use only as much credit as you can repay. In order to do this, make sure your credit usage doesn’t exceed half your income amount. You can also take measures such as paying your credit card balance in full and not using your credit card up to the full limit consistently.
Additional Read: CIBIL score calculation
Report discrepancies in your credit report, if any
Discrepancies in your credit report can sometimes affect your CIBIL score—for instance, if recent payment updates aren’t reflected. This can impact your chances of availing a personal loan. That’s why it’s important to monitor your credit score regularly and address any errors without delay. Bajaj Finance offers a simple way to check your CIBIL score. A consistent check helps maintain a strong credit profile and improves loan eligibility.
Borrow a mix of credit
If you do not borrow credit, you will not have a credit score. Also, if you borrow only one type of credit, it will not increase your CIBIL Score. Thus, to improve your CIBIL Score, borrow a mix of credit. This involves taking secured and unsecured credit and repaying it diligently. Establishing credit experience will surely benefit your score.
In general, refrain from making ad-hoc financial decisions. Always try to take and use credit responsibly to maintain a good CIBIL credit score. Also, remember that once you implement these measures, it may take around 6 months to a year for your score to show improvement.
Conclusion
Your CIBIL score plays a vital role when applying for a personal loan, as it reflects your creditworthiness. A high score increases your chances of getting a personal loan on CIBIL score, often with better interest rates and terms. On the other hand, a low score may reduce approval chances or lead to higher borrowing costs. If you're wondering how to increase credit score for personal loan, start by paying your EMIs and credit card bills on time, maintaining a healthy credit mix, and checking your report regularly for discrepancies. Taking these steps can improve your financial profile and help you qualify for better loan offers when needed.
