To keep a decent CIBIL score, you must practise disciplined credit management. Though your CIBIL score may not improve overnight, there are several things you can do to improve it. Improving your CIBIL score can take six months to a year. It is important for you to have discipline in your repaying habits and credit management systems in order to have a high CIBIL score. Having a CIBIL score close to 900 can make you eligible for numerous benefits that come along with a high Credit score. However, if you have a good score that doesn’t mean that your score cannot fall. You need to maintain your good practices in order to maintain your CIBIL score and its benefits. Similarly, if you have a low CIBIL score then there are a number of disadvantages that you might have to face while applying for any form of credit in the market. Lenders might charge a hefty rate of interest on your loan application if you have a low CIBIL score.
Measures to Improve CIBIL Score
If you have a low CIBIL score and are willing to improve it then there are a few steps that you might need to follow. The few measures that you can adapt to improve your CIBIL score are as follows:
Making Repayments On Time
If you want to keep your credit score high, make sure you pay your loan EMIs and credit card bills on time. Regular EMIs show the bank that you are responsible and can help you improve your CIBIL score.
A solid combination of secured and unsecured loans will help you improve your credit score. Applying for only unsecured loans might give banks the impression that you are a high risk borrower since you would not be providing any form of collateral to the bank.
Maintaining a low debt to income ratio
While loan repayments can reduce the amount due over time, it is also recommended that you do not frequently exceed your credit card limit, as this will reflect adversely on your creditworthiness.
Do not Apply for Multiple Credits
Applying for multiple credit cards at the same time may seem enticing because it is a convenient method to access cash quickly, but managing too many credit cards can be challenging at times, and missing even a single EMI will hurt your credit score.
Keeping Old Accounts
Keeping an old debt on your credit report and paying its EMIs on a regular basis portrays a positive image of your trustworthiness and can help you improve your credit score.
Few Benefits of Having a High CIBIL Score
There are numerous benefits that come along with a high CIBIL score. Some of those benefits are as follows:
Lower Interest Rates
If you have a high credit score, you will nearly always be able to obtain the lowest interest rates and pay lower finance charges on credit card balances and loans. You will be able to pay off your debt faster if you pay less interest.
Easy and Simple Credit card and loan approvals
Your chances of obtaining credit rise when you have a high credit score. In general, you can apply for a loan or a credit card without worry of being turned down. This is due to the fact that banks consider you creditworthy for the loan if you have a strong CIBIL score, and so they are more likely to approve your loan or credit card application.
If you have a good credit score, you can further negotiate the given interest rates on credit cards and loans. However, if you have a low CIBIL score, the bank would charge you a high interest rate on your loan application. You would not be able to further negotiate the terms with the bank if you have a low CIBIL score.
You may easily apply for a top-up and increase the loan amount on an existing loan because banks will assess your credit score and consider it to easily add some money to the existing loan amount.These are some of the advantages that come along if you have a high CIBIL score. Moreover, having a high CIBIL score does not mean that it will remain like that. You need to maintain your CIBIL score in order to have these benefits and advantages. If your CIBIL score drops then you might have to face a lot of disadvantages as well. It is advisable to make a CIBIL score login to regularly keep a check of your credit score and reports.