4 Tips To Improve Your CIBIL Score Immediately - Loan Trivia


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Wednesday 9 June 2021

4 Tips To Improve Your CIBIL Score Immediately


In India, RBI has authorised four companies to obtain and manage borrowers’ credit information. CIBIL started its activities in 2001 and became one of the country's most-followed credit information bureaus in the past two decades.

TransUnion CIBIL is one of the four credit bureaus in India that produce reports based on credit score. A borrower’s credit score reflects his/her credibility as a borrower, and lending institutions take note of the same before sanctioning a loan amount or other financial products based on credit. In this regard, it is crucial to remember that even the smallest CIBIL disputes can hurt the creditworthiness of a borrower.

How is credit score calculated?

A CIBIL score is calculated by considering several factors, including an individual’s payment history, credit applications, repayment history, credit mix, debt amount etc. CIBIL puts certain weightage on each of these parameters and then allots a credit or CIBIL rating to the borrower.

4 Essential factors to enhance CIBIL score

It is recommended for individuals to maintain a CIBIL score of above 750 to avail a loan on favourable terms and conditions. This is especially necessary if a borrower plans to avail a personal loan as it is unsecured in nature, and disbursal is subject to his/her credibility.

Here are few tips that can improve CIBIL score for a personal loan - 

  • On-time repayments - A borrower’s repayment behaviour is very important to determine his/her credit score. The overall track record of loan and credit card repayments comprise one-third of the credit score’s calculation. Even a single delayed payment can adversely affect your score, and the significant CIBIL dispute it will cause can harm your creditworthiness.

  • Limit credit usage - Using less than 30% of one’s available credit limit can significantly improve his/her credit score. If an individual exceeds this limit, he/she might be deemed credit hungry by financial institutions. To enhance their credit score, one can either opt for a higher spending limit or cut back on unnecessary expenses.

  • Constant check on credit report - One should keep a constant check on their credit report and immediately opt for a credit report correction if any error is identified. Online services offered by credit rating bureaus, as well as different financial institutions, have made the process of checking credit report easier. To identify errors like incorrect information, delay in updating reports, and more, one can check the CIBIL score by PAN card and other essential information.

  • Have a mix of different credit types – It is crucial to maintain a healthy balance of both secured and unsecured credits to maintain a high credit score. Depending on a particular credit form to fulfil all types of financial requirements can have adverse effects on one’s credit health.

Following these above-mentioned factors can effectively help improve one’s CIBIL score and consequently avail better interest rates on a personal loan. Timely CIBIL dispute resolution is extremely important in this regard.

If they can maintain a favourable credit score, borrowers can avail a personal loan extended by leading NBFCs like Bajaj Finserv against simple eligibility and minimal documentation by applying for it online.

This financial institution also provides pre-approved offers on several financial products like personal loan, business loan, etc., to accelerate and simplify the loan application process. One can check the pre-approved offer by entering his/her name and contact information.

It is to be remembered, a credit score does not improve overnight and necessitates financial discipline on the individual’s part. Nonetheless, with these measures in place, individuals can effectively improve their CIBIL score with time.

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