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How to increase credit score in India? 10 ways to improve your CIBIL score

June 10, 2021 | posted in News | posted by : Manappuram Finance
Your CIBIL score is a big concern if you are planning to get a loan. It is the yardstick to identify the credibility of a borrower. Banks and financial institutions check the applicant’s CIBIL score before approving a loan. You are at the right place if you are looking for tips on how to boost your credit score immediately. This article is intended to give a few methods for increasing the score to 800 and above.
At the same time, it would be ideal to consistently maintain it above the fair mark rather than becoming anxious about it at the last moment. No, you don’t have to worry even if your CIBIL score is low. It can be improved by using some simple tips and actions. In this article, we look at ways to increase your credit score quickly.

What are the Factors Affecting CIBIL Score?

TransUnion Credit Information Bureau of India Limited (CIBIL) is an approved financial institution for ascertaining credit scores since 2000. The organization evaluates the CIBIL score based on certain financial parameters. The score is considered the most reliable information to gauge the creditworthiness of an individual. It is a three-digit number ranging from 300 to 900.
A credit score from 300 to 549 would be considered a Poor rating. The banks and NBFCs may not be keen on approving a loan in case you fall in this range. The score from 550 to 700 is Fair and from 701 to 900 is Good. You must focus on gaining a score above 800. The higher the score, the easier it is to obtain a loan. To be precise, banks will be eager to provide loans to those who have a CIBIL score of around 900. That’s why many engaged in business who may need loans frequently, search for ways to boost credit score to 800 or above and act accordingly.
Once you have identified the aspects that play a major and decisive role in CIBIL, it would be a challenge to abide by each. Responsible financial firms would advise clients on the status of the CIBIL score and provide guidance regarding the methods to improve it. They would also have professionals to support the customers. The factors considered for determining credit score are:
-         The payment history of the individual
-         Total number of loan accounts against the debtor
-     Whether the person is a guarantor for any other individual (and whether the individual has defaulted payments)
-         Outstanding loans
-         Repayment history of previous loans
-         How prompt you were in repayment of the previous loans

How to Increase Credit Score Fast?

Disciplined expenditure, timely payment of credit card bills, automatic repayment of EMIs, appropriate financial management, preventive methods to preclude budget overheads, and similar actions can be helpful in maintaining a positive CIBIL score, i.e. a credit score above 800. Nonetheless, it may not be an easy task to monitor all these, and remain perfect, when you are too busy to think and plan. Consequently, the score may go down and the agency may rate you Poor, in the CIBIL score.
The steps on how to  boost credit score immediately, explained here, would be of immense use. Try to apply those and elevate the score to get a loan approved without much hassle.

1.         Analysis of Credit Card Report

Credit cardholders face the biggest challenge concerning CIBIL scores. Any lacunae in the past delayed payments, non-repayments will be reflected in the report, impacting the credit score. The first thing a credit cardholder, hoping to increase credit score fast, must do is to analyze the credit card report. Confirm that it doesn’t have any incorrect information about your previous payments. Many times it can happen that you have paid the amount; however, it is not reflected in your account. Approach the bank and correct the anomaly in time. Furthermore, repay the pending loans or debts, if any.

2.         Try to Increase Credit Card Limit

You may be owning a credit card with a lower credit limit than your actual eligibility. Request the bank and raise the credit card limit (However, you should maintain the previous expenditure only). This would decrease your credit utilization remarkably. Putting you in a positive spot, as a person with controlled expenses. Once you register a decent period with this “controlled” spending, it would result in a positive CIBIL score. The lower expense vis-à-vis higher credit card limit is a positive indicator.

3.         Gold Loan Instead of Personal Loan

Getting a gold loan instead of a personal loan, when you are in urgent need of money, will be beneficial to maintain a positive CIBIL score. Undoubtedly, it is one of the ideal options to increase the credit score as well. The main difference between a gold loan and a personal loan is that a gold loan is a secured loan and the personal loan is an unsecured one. Since the gold loan is disbursed against gold pledged at the NBFC or bank, the lender has surety concerning the money. It also has the advantage of a lower interest rate than a personal loan. Therefore, obtaining a gold loan is better from the point of improving credit scores, besides reducing the financial burden on the individual.

4.         Pre-payment of Gold Loan

You may be wondering about the repetition of points related to the gold loan, whilst we are discussing how to increase credit score fast. It is to enlighten those looking for some quick loan options, without hampering CIBIL score. You can arrange the required money in the shortest possible time. And do undertake early repayment of the gold loan as well. Many reputed financial firms don’t levy a charge on the pre-payment. Hence, you can close the gold loan account at the first available opportunity, enhancing your CIBIL score. However, you need to confirm whether the finance firm is charging any pre-payment fine or not. Otherwise, you will end up paying an extra amount over the usual.

5.         Opt for Longer Loan Tenure

This point must be kept in mind before you apply for any loan. Although not much effective in raising credit score immediately, a longer tenure of the loan will be useful in many ways. The EMI is calculated based on loan tenure. Therefore, a longer tenure will effectively reduce the EMI. Lessening the financial burden will help you repay the loan without default. This paves the way for a better credit score that will help you access loans without much difficulty. An important point on how to boost credit score immediately.

6.         Credit-mix is Effective in Augmenting the CIBIL Score

How the agency will assess your CIBIL score if you haven’t taken any loans!? The individual, who hasn’t taken any loan in the past, will have a low score. The foremost thing you must contemplate, before searching on how to boost your credit score to 800, is the type of loans you have taken until now. A healthy credit mix of secure and insecure loans is what will give you an advantageous credit score. You can go for a gold loan in lieu of a personal loan, in times of urgent requirements. A secure loan against your name is favorable to a positive credit score. And apply for an unsecured loan in other scenarios. Thus showing a mix of secured and unsecured credit against your name.

7.         Keep the Old Debt Records in the Report

You might have closed the previous loans successfully and may think of asking the banks to remove those records from your report. Don’t do that. Keep the records of the successful repayments and loan closure in your report. It will be a positive aspect when you search for how to boost credit score immediately. A record of proper loan repayment points to a trustworthy individual. Which bank will not want to finance a trustworthy individual?

8.         Avoid Cash Advances on Credit Card

A cash advance on a credit card simply implies that you are not good at financial management. It will adversely affect your credit score and may push it down further. Taking a loan on a credit card should be the last option. The gold loan may be a better option in such cases. Moreover, the loan on a credit card will have a higher interest rate compared to all the other finance options making it the least preferred option, to be used only when you cannot arrange funds from any other sources.

9.         Don’t Use Credit Card for Every Purchase

People are too eager to use a credit card on every possible occasion. They calculate the profit gained by repaying the money about a month later. Nonetheless, it will not be a good indicator, with respect to the CIBIL authority. The agency may consider you as a spendthrift and bad in money management. A proper balancing of credit card usage with other resources is the right way to manage money.

10.       Don’t Close the Existing Credit Cards

Managing money effectively; by mixing the usage of credit and debit card is more advisable than not using a credit card at all. Closing a credit card will be indicative of your poor economic status and financial management. Keep the credit card open, even if you are not using it much. It would help you maintain a credit score above 800.

FAQ

How to increase credit score with a credit card?

You should maintain the credit card record in the most optimal way. By keeping the credit card open, paying the dues in time, managing the credit card payments perfectly, and avoiding cash advances on a credit card, you can increase your credit score significantly.

How to increase credit score without a credit card?

This is one of the most relevant questions, as many in India do not use credit cards. You can increase your credit score, even though you are not using a credit card, by becoming an authorized card user, by paying the loans in time, observing a mix of secure and insecure loans, and so on. You may talk to us to know more in this regard.

How to increase credit score to 800?

800 is the dream number for the borrowers. Most of the debtors want their CIBIL score to be 800 or above. You can boost the credit score to 800 by pursuing proper financial planning, proper loan repayment, obtaining a gold loan in place of personal loans, etc.

How to increase credit score in India?

 The easy and effective steps for increasing credit score in India are:
-         Pay loans in time
-         Avoid delays in repayment of EMI
-         Sensible use of credit cards
-         Credit card may not be used for cash advance
-         Credit mix of secured and unsecured loans will keep your credit score healthy
-         Build a reliable payment history by following the best financial management
-         Keep an eye on the joint accounts as well. The missed payments, delayed EMIs and similar errors in the joint account will affect your CIBIL score as well
-         Never go for a credit card beyond your financial capacity
-     Get historical reports of credit cards periodically and check for any missed payments or erroneous statements. Mistakes from the bank’s end may be intimated to the bank and corrected at the earliest

How to increase credit score using a gold loan?

The gold loan can be leveraged to boost your credit score immediately. A gold loan is a secure loan since it will necessitate the mortgaging of your gold property at the bank or the financial firm. Indicating your financial strength, as well as, generating a healthy mix of secure and insecure credits. Thereby enhancing credit score optimally.

How to boost credit score to buy a house?

Buying a home is the biggest dream for many. Homebuyers always opt for loans from reputed banks and financial firms for buying the property. The first thing checked by the banks/ NBFCs before approving a loan, the credit score can be boosted by pursuing healthy financial management practices.  It includes repayment of loans in time, a healthy mix of secured and unsecured loans, and prudent use of credit cards. Reach out to us to know more about this.

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