Smart tips to improve your CIBIL Score

Clear all your outstanding debt

Having outstanding debt shows up on your CIBIL report as a negative factor. As long as you still owe money, it will drag down your credit score. The good news is that the moment you clear your debt, your score starts recovering. To clear your outstanding debt faster, you have two options: either repay your debt within your chosen timeline through regular EMI payments, or make prepayments to close the loan early. Using credit responsibly and paying off what you owe is one of the fastest ways to improve your CIBIL score.

Additional read: Personal loan for low CIBIL score

Pay your EMIs on time

Just making EMI payments isn't enough – you have to make them on time. If you miss even one payment or pay late, it will pull down your CIBIL credit score. Here's why: every delayed EMI payment is recorded in your CIBIL report with details about how many days you were late. This history stays on your record and affects how much lenders trust you.

The best way to ensure on-time payments? Set up an automatic transfer from your bank account directly to your lender. This way, you don't have to remember anything – the money transfers automatically on the due date. Just make sure you always have enough money in your account for the transfer. This approach ensures you never incur a bounce charge and helps you continuously improve your CIBIL score.

Limit your credit utilisation

Credit utilisation means how much of your available credit you're actually using. When you use too much credit, it sends a red flag to lenders. They think you're living beyond your means – that you can't manage your money within your income. This hurts your credit score.

The smart approach: only use as much credit as you can actually repay. A good rule of thumb is to keep your credit usage below 50% of your total credit limit. For example, if your credit card limit is Rs. 1 lakh, try to spend no more than Rs. 50,000. You can also take practical steps like paying off your credit card balance in full every month instead of carrying a balance, and avoiding using your credit card up to the maximum limit regularly. These habits show lenders you're responsible with credit.

Additional read: CIBIL score calculation

Report discrepancies in your credit report, if any

Mistakes happen. Sometimes your credit report might show incorrect information that can hurt your CIBIL score – for instance, a payment you actually made might not be reflected in the report, or there might be accounts you don't recognise. These discrepancies can seriously damage your chances of getting a personal loan approved.

That's why it's crucial to monitor your credit score regularly and address any errors without delay. Check your report at least once or twice a year. If you spot any mistakes, report them immediately and ask for a correction. Bajaj Finance offers an easy way to check your CIBIL score and review your complete credit report. A consistent check helps you maintain a strong credit profile and improves your chances of getting loan approval.

Borrow a mix of credit

This is an important step that many people overlook. If you don't borrow any credit at all, you won't have a credit score – lenders won't know anything about how you handle borrowed money. On the other hand, if you borrow only one type of credit (like only personal loans or only credit cards), it doesn't show lenders that you can handle different types of credit responsibly.

To improve your CIBIL score, aim for a healthy mix of credit. This means taking both secured credit (like a home loan or car loan where you pledge something as guarantee) and unsecured credit (like personal loans or credit cards where you don't pledge anything). When you borrow different types of credit and repay all of them on time, it proves to lenders that you're responsible with all kinds of borrowing. This establishes a strong credit history and improves your score significantly.