In today’s time, the first thing that is seen while applying for a loan or credit card is your CIBIL score. Your CIBIL score matters a lot from taking a loan to getting vehicle finance. A good score increases the chances of getting a loan and can also reduce the interest rate. However, due to a weak score, the loan may be rejected or you may be forced to take a loan at a higher interest rate.
Increase CIBIL score in five ways
It is very important to improve the CIBIL score. Here we will tell you about 5 important ways by which your score can be improved.
Payment of bills and loan installments
The first way is to pay all your bills and loan installments on time. Timely payment strengthens your credit history and the score goes up without any problem. Even a single late payment can cause a lot of damage to your score, so it is very important to make the payment on time.
Limited use of credit card
The second most important way is to limit the use of your any credit card. It is said that you should use only up to thirty percent of your credit limit. If you use more, it indicates that you are under financial pressure and this has a negative impact on your CIBIL score.
Good credit mix
The third way is to keep a good credit mix. Instead of having only a personal loan or only a credit card, having a good mix of secured and unsecured loans improves your score. This shows that you can handle different types of liabilities well.
Do not close credit cards and accounts without reason
The fourth way is not to close old credit cards and accounts without reason. Old credit history will reflect the stability in any kind of your financial behaviour, which will strengthens your cibil score. Therefore, if there is no annual fee on the old card, then keeping it running is a wise step.
Less loan or credit card
The fifth and last way is to avoid applying for a new loan or credit card repeatedly. Every time you ask for new credit, banks do a hard inquiry which can cause your score to drop slightly. If this happens repeatedly, it can cause great damage to your CIBIL score.
What should be the CIBIL score
The CIBIL score ranges from 300 to 900. A score of 750 or more is considered good while 900 is the best score indicating the highest creditworthiness. A CIBIL score between 550 and 650 is considered average.