CIBIL Score is a prescription of a financial report. Its shows how you are maintaining financial health. A good CIBIL report gives you many benefits like taking a quick loan, credit card, buying products on EMI, and more.
But a bad CIBIL score can destroy your financial health. Before falling under the under, check our 8 ways to increase your CIBIL Score from 600 to 750.
What is CIBIL SCORE?
A CIBIL score is a credit rating system for businesses. It uses information from your credit history to determine the health of your business’s finances and how likely you are to pay back loans that you take out with other lenders in the future.
If this sounds familiar, it might be because another scoring agency called FICO did precisely this thing before Cibil bought them out many years ago!
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Why You Need CIBIL Score
You need CIBIL score boosting strategies because if your number isn’t high enough, you won’t access the capital you need to grow and expand. Your business will suffer as a result!
And it doesn’t stop there – lenders may decide to blacklist you altogether, which means that every time someone wants credit from another lender, they’ll see your name on their list of ‘do not’s and assume something is wrong with your company even when there’s nothing at all wrong.
It could take years for this black mark against your name to go away, so what can be done about it?
Keep reading below…
8 Ways to Increase Your Cibil Score
Here is the 8 tips to boost your Cibil Score quickly:
1. Pay Bills on Time
– Lenders believe that if you’re able to take on debt, then you’re likely to be able to keep up with paying it off or at least address any red flags in your payment history before they become unmanageable if you’ve missed a bill payment in the past, whether for credit cards, utility bills, mortgages, loans, or even for your credit card or store’s membership, let the lender know as soon as possible.
– If you can’t pay your bills on time, don’t take out loans unless it is to buy something essential such as a home. This way, you’ll have no choice but to clear those debts eventually and be able to move forward with your life.
– Paying off your bills on time is a great way to boost up your CIBIL Score quickly.
Don’t miss any payments, and ensure that you make those minimum payments every month and pay more than the minimum amount if possible. This will help to keep your utilization ratio down, which will also increase your Score.
2. Close credit card accounts you no longer use
– It may seem like a great idea to open up as many credit cards as possible and then use them all the time. This way, you can increase your available credit and get more of the benefits that they offer. However, if you do this without making payments on time or at all, your Score will go down as you’ll be seen as someone who can’t manage their finances well. It doesn’t matter how much money you have; you won’t access more credit if your score is low.
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3. Apply for a secured credit card if you have bad credit
A secured credit card is a great way to prove that you’re serious about getting into good financial shape. If approved, all you need to do is put down a security deposit that’s equal to the amount of credit you want. When you make payments on time, the card issuer will release your deposit, and you’ll be able to access more credit.
– The best thing about this is that if you use it responsibly and pay off your balance each month, it will show lenders that you’re someone who can manage their Personal finances. You’ll also be building up a positive history, which means that applying for further credit won’t be nearly as difficult as before. Once your Score starts climbing back up again, you can apply for another type of credit card with better benefits.
– Make sure to only apply for one at a time because opening multiple accounts in a short space (within 30 days) may look like you’re taking out too much debt all at once, which will affect your Score.
– You can apply for a secured credit card with CIBIL’s Online Application to get started immediately!
4. Keep Utilization Ratio Low
The utilization ratio is the amount of debt you have divided by the total amount of available credit. To keep this ratio low, only use around 30% of your overall credit limit. If you want to improve your score, pay off more of your debt to reduce the ratio. This will demonstrate to lenders that you’re responsible with money and are unlikely to be late on any future payments.
5. Keep All Accounts Open
– Closing an account down means that your overall available credit stays the same, but your overall credit limit is reduced, which can make lenders doubt whether or not they should extend more credit to you again in the future. Even if it isn’t maxed out, stay away from closing accounts because this can affect how much existing credit is available to use at any one time.
– However, if there’s no way for you to stop yourself from using their services because of high interest rates, then it’s worth making sure that you pay your monthly bill on time. If this means working out a plan to repay it quickly or even taking out another loan to settle the balance, make sure you always do what is suitable for your situation. You’ll be rewarded for being responsible for your credit.
6. Pay EMI Dues on Time
– This is essential for your CIBIL Score if you want to access more credit in the future. Every time you make a payment on time, it will show up as a positive event, which will also push your score. It doesn’t matter if you have to borrow money from someone else or work out some way to pay much sooner than normal; you must always pay on time and avoid late fees.
– If you don’t have the money to make a payment, speak with your lender so they can work something out with you. That way, no matter how busy your life is at the moment, you’ll still get into good financial shape and improve your credit score.
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7. Avoid Multiple Loan Inquiries
– Each time you apply for a loan, your credit score will drop slightly. This is because the inquiry is listed as an account with high debt, which can make lenders worry whether or not you’ll repay them on time if they were to extend such a large sum of money to you. You don’t want multiple inquiries close together, as this can send a message to lenders that you’re desperate, and they may decide against offering you credit in the future.
– If you need to take out a loan, it is best to do so months apart from when your last one was settled. This will ensure that you aren’t looked at as someone who goes from debt to debt without any control over their spending, resulting in lenders see you as a risk.
– You can now apply with CIBIL to get multiple loans from different lenders within minutes by using the ‘Quick Loan’ feature of the application!
8. Avoid Credit Limit Increases
– If you’re not responsible for your credit card spending, it’s best to avoid getting more money available on your account. When you ask for a higher limit, lenders think that you’ll overspend on the new credit, too, which can make them worry even more about whether or not they should give you more cash in the future.