In today’s world, your CIBIL score is your financial reputation. Whether you’re applying for a loan, credit card, or even vehicle finance, lenders check your score first.
A good score not only increases your chances of loan approval but also helps you get better interest rates. But if your score is low? You might face rejection or end up paying a lot more in interest.
Let’s break down five easy and effective ways to improve your CIBIL score and strengthen your financial standing.
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1. Pay Bills and EMIs on Time – Always
This is the most basic and powerful rule. Paying your loan EMIs, credit card bills, or utility bills on time plays a huge role in building your credit history. Even one late payment can hurt your CIBIL score badly. So, set reminders or use auto-debit to make sure you never miss a due date.
2. Limit Credit Card Usage
Just because you have a ₹1 lakh limit doesn’t mean you should use it all. Experts suggest using only up to 30% of your credit limit. Going beyond that shows lenders that you might be under financial stress, and it can bring your score down. So if your credit limit is ₹50,000, try not to use more than ₹15,000 regularly.
3. Maintain a Good Mix of Loans
Your credit portfolio matters. Having just personal loans or just one type of credit isn’t ideal. A good mix of secured loans (like a home or car loan) and unsecured loans (like personal loans or credit cards) shows that you can manage different types of debt responsibly. This helps improve your score in the long run.
4. Don’t Close Old Credit Cards Without a Reason
Old credit cards help show a long and stable credit history. If there’s no annual fee, it’s better to keep them active—even if you don’t use them much. Shutting down old accounts can reduce your overall credit limit and shorten your credit history, both of which can negatively impact your score.
5. Avoid Too Many Loan or Credit Card Applications
Each time you apply for a loan or credit card, banks do a “hard inquiry” into your credit. A few inquiries are okay, but if you apply too often in a short period, it makes you look credit-hungry. This can pull your score down. So, space out your applications and apply only when needed.
What’s a Good CIBIL Score?
CIBIL scores range from 300 to 900.
- 750 or above is considered good
- 800+ is excellent
- 650–750 is okay but can be improved
- Below 650 could make it harder to get loans at good terms
Improving your CIBIL score isn’t rocket science—it just needs some discipline and smart habits. Whether you’re looking to take a loan soon or just want to be financially sound, following these five steps can put you on the right path. The higher your score, the better your chances of accessing credit when you need it—and at lower rates too!