Boost Your CIBIL Score by 150 Points - From 600 to 750!

Understanding the arithmetic behind your CIBIL score is crucial, as it defines your creditworthiness. Typically, a credit score above 750 makes you an attractive candidate for lending, while anything below that mark may result in loan rejections or higher interest rates.

A good credit rating can help you achieve your financial goals, whereas a low credit score (between 600-650) indicates low confidence from lenders in your repayment capacity, which may result from negative marks in your credit information report.

Common reasons for low credit scores include defaults, high credit utilization, excessive dependence on credit cards, recent loan queries/rejections, a high debt-to-income ratio, fraud, or errors in credit reports. While it may be possible to find a lender willing to offer loans to low-credit borrowers, these loans come with stricter terms and higher interest rates.

To improve your credit score by at least 100 points, it's advisable to work on your credit profile and clear any outstanding credit card balances. Managing your credit utilization by expanding credit limits or limiting credit usage can also help improve your score. If you have multiple credit cards, consider closing idle cards with bad histories but prioritize keeping the oldest card with a good track record of bill payments.

3. Establish a Strong Credit History:

In the event that your credit report shows negative marks, your options for improving your score become limited. While you cannot erase unfavorable history from your Credit Information Report, you can work toward building a positive portfolio and leaving past mistakes behind. Although complete removal of bad history from your report may take several years, timely repayment of loans will establish a solid credit history and aid in loan eligibility. Your recent credit repayment history is impeachable evidence of your borrowing and repayment capabilities.

4. Consolidate Debt and Reduce Monthly EMI:

If you are struggling to juggle multiple loans and credit cards, consolidating your debt and opting for smaller EMIs may be a solution. In addition to paying off credit card balances, consider closing some accounts. Repaying balances and closing some loans can boost your credit score.

5. Dispute Report Errors:

Frequent causes of low scores relate to mistakes or disputes in your report. Assess your report and dispute any errors immediately. If you find an unidentified transaction, notify the authorities. Do not take unknown hard queries lightly, as they could be the result of hacking attempts. Take prompt steps such as blocking the card.

6. Avoid Account Settlement:

As a consumer, settling a loan and easing repayment burdens may seem attractive, but the settled account will remain in your report. Refinance and close the account instead of settling down.

7. Diversify and Balance Your Portfolio:

If your Credit Score is weakened by unsecured loans and credit cards, attempt to balance the portfolio by applying for a secured card or secured loan. A secured loan is more beneficial for your profile.

Credit improvement entails managing your financial habits. Although none of these steps provideinstant results, by adhering to them, your score will gradually improve within six months.

Additionally, refer to the following tips to obtain a hassle-free loan:

1. Assess your eligibility prior to loan application.

2. Limit hard queries. Seek professional assistance and compare deals.

3. Borrow according to your repayment capacity. Use the EMI Calculator to understand loan burden.

4. Develop a backup plan for repayment besides improving your score.

5. Consider a guarantor or co-applicant for reduced rates.

6. Opt for a secured loan for a lower interest rate.

Also Check: Cibil score required for personal loans

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