Banks and financial institutions first check a customer’s credit history when granting loans. The CIBIL score is a summary of this history, indicating whether the individual has repaid previous loans on time. Late payments, bounced EMIs, excessive credit card usage, and frequent loan applications can lower the score. This is why many people, despite having a good salary, are unable to get loan approval.

A safe CIBIL score is above 700

The credit score ranges from 300 to 900. Banks generally consider a score of 700 or higher to be safe, as it indicates that the customer is financially responsible. With this level of score, not only is loan approval faster, but you may also get relatively lower interest rates. A score below this level is considered risky by banks, and they may reject the application.

Don’t panic if you have a low CIBIL score

If your CIBIL score has deteriorated for any reason, it’s not a permanent problem. It can be improved with the right strategy and regular payment habits. The most important thing is to pay existing loans or EMIs on time. Even a few months of regularity can positively impact your credit profile, and the score will gradually improve.

Small transactions can improve your CIBIL score

Those who currently don’t have any loans can use small digital credit options. Choosing EMI options for online shopping, making timely payments for Buy Now Pay Later services, or paying postpaid mobile bills on time helps build a credit history. Taking small loans against petrol cards or FDs and repaying them on time is also considered an effective way to improve your score.

Be mindful of credit cards and EMIs

Using credit cards wisely is crucial. Spending your entire credit limit negatively impacts your score. Limited usage and timely payments assure the bank that the customer is responsible. It’s also important to avoid taking multiple loans simultaneously, as a heavy debt burden can increase payment difficulties in the future.

Build a strong credit profile in the long Time

When you consistently make all your payments on time for a year or more, a noticeable improvement in your CIBIL score becomes evident. This increases your chances of getting home loans, car loans, or personal loans from major banks. Maintaining sound financial discipline not only protects your CIBIL score but also strengthens your financial credibility.