How To Improve Your CIBIL Score To Qualify For Future Loans

When you are applying for a loan, banks and financial institutions primarily look for your CIBIL score or credit score. This three-digit number, ranging from 300 to 900, shows your creditworthiness and financial discipline.

A higher CIBIL score increases your chances of loan approvals and helps you get loans at lower interest rates. While lower CIBIL score can lead to rejections or higher borrowing costs. 

Your credit score is a three-digit number that represents your creditworthiness and reliability. It assures lenders that you can make timely loan repayments. Your credit score is affected by a number of factors such as your credit type, existing liabilities, and payback history.

1. Pay your bills and EMIs on time: One significant factor affecting your CIBIL score is the timely repayment of loans and credit card bills. Even a single missed payment can negatively impact your score. Banks check your credit history and can see it as a sign of financial irresponsibility. So, to avoid this, pay your pending bills and EMIs on time.

2. Low credit utilisation score: Your credit utilisation ratio shows how much of your total available credit you are using. Experts suggest using less than 30 percent of your total credit limit. For example, if your credit cards give you a total limit of Rs 1,00,000, try to use no more than Rs 30,000 at a time.

3. Avoid taking multiple loans: Every time you apply for a loan, banks always check your credit history. If you apply for many loans or cards in a short time, it can make lenders think you are in financial trouble, which can lower your score. So, apply for loans only when you really need them.

4. Do not miss EMIs: If you miss any of your EMIs, then it could lower your credit score. Even paying late or only part of the EMI can also cause long-term damage to your credit score. In case of trouble in paying EMIs, you can either reschedule EMI or talk to your bank for other options to make repayment easier.

5. Reduce your debt: Your CIBIL score may suffer if you have a large amount of unpaid debt, particularly on credit cards or personal loans. Therefore, pay off high-interest debt first.