How To Improve Your CIBIL Score Before Year-End
You can start rebuilding their CIBIL Score with focused actions at clearing outstanding dues, reducing EMIs and monitoring credit reports.
A low CIBIL Score is assumed to shut the door on any future credit and eliminates all possibilities of recovery. The general feeling among consumers is that once their score falls, no lender will give them a loan or even a credit card.
But often, a low score may be due to unforeseen circumstances, such as missed payments resulting from financial constraints, overspending immediately after getting a new credit card or simply forgetting to keep the account funded before the due date. While such situations can dent one’s credit profile in the short run, the fact is that the CIBIL Score reflects one’s overall repayment history, and that history can always be rebuilt.
What Is A Good CIBIL Score?
A CIBIL Score ranges from 300 to 900 and reflects a person’s creditworthiness. Scores closer to 300 usually indicate missed payments and poor credit behaviour. Scores nearer to 900 signal strong repayment discipline and can help build trust with lenders.
Generally, a score above 650 or 700 is seen as good and an indicator of responsible financial management. A strong score not only improves the chances of loan approval but can also lead to better borrowing terms, including higher credit limits, lower EMIs and favourable interest rates.
Even if someone’s credit score has fallen significantly, efforts taken now can still make a difference before the year ends.
Pay Off All Outstanding Amounts
Once financial stability returns, the priority should be the clearing all overdue payments. If a person has multiple credit cards or personal loans, consolidation into a single loan makes the repayments more manageable. In such cases, there are fewer due dates, and it would become easier to maintain consistent repayment behaviour.
Reduce EMIs To 30% Of Monthly Salary
Limiting EMIs to no more than 30% of net monthly income shows responsible borrowing. Anything beyond that indicates lower capacity to repay and may adversely affect the credit profile. Keeping EMI at or below this limit helps build credit positively and gradually.
Keep Balances Low And Apply For Credit Carefully
The temptation to use more credit is highest when money is particularly tight. But maintaining low credit card balances and not applying for new credit unless absolutely necessary goes a long way in rebuilding score strength. Continued use of the existing credit cards, coupled with timely repayments, supports positive credit behaviour.
Mix Secured And Unsecured Credit
Relying solely on unsecured credit, such as personal loans or credit cards, may not present a strong credit profile. A mix of credit types, such as secured and unsecured, shows lenders' consistency in repayment commitment across different categories of loans.
Monitor CIBIL Score Regularly
Reviewing the CIBIL Report helps identify inaccuracies, including open accounts listed incorrectly. Regular monitoring allows people to track their progress, understand score trends and ensure that all details on the report are accurate.
A high CIBIL Score ensures easier access to loans and credit when required. Consumers can start working towards improving their score now with focused and consistent efforts, thus taking a step closer to achieving their financial goals.
