how to increase cibil score?
Today, I’m going to tell you how to increase your CIBIL score, step by step. If you want to know about the new GST update, debt management, or CIBIL score, I’ve already written detailed articles on these topics. Be sure to read them.
CIBIL scores range from 300 to 900. Generally, a CIBIL score of 740+ is considered good. A score above 740 increases your chances of loan approval.
1. credit card utilization
The biggest mistake people make is getting a credit card, but they don’t realize that their CIBIL score is significantly affected by credit cards. Timely payments alone don’t improve their score.
If your credit card limit is Rs 1,00,000 and you spend Rs 50,000 to Rs 100,000 every month or exceed the limit, it has a huge impact on your score.
Because a report about you goes to the bureau about how much limit of your credit card you have and how much you spent from it, if you spend 30% more than the limit then the bureau feels that you are living a life of a borrower, meaning you are dependent on credit.
You should always spend only 30% of your credit card limit.
2. Don’t degrade your credit history
If you had taken a credit card 5 years ago and you are making payments on time and everything is going well, why are you not facing any problem?
We take a new card and think of closing the old credit card, but this should not be done. If it does not have high annual charges or maintenance charges and you can also afford it, then you should not close that card.
Because the longer your credit history, the better it will be. If you close an old credit card and apply for a loan, any past history will disappear, provided you made timely payments and used less than the limit.
The loan may even be cancelled because it won’t show a credit history. The older the credit history, the better it is, and the faster it increases your credit score.
3. Never delay you payments
Late payments are the reason for 70% of people whose CIBIL is low. You should always pay your monthly EMIs ahead of time.
If you delay payment for six months, you won’t be able to get a loan for the next six years. Just because you’re six months late, you can’t get a loan or a credit card for six years. This will completely destroy your CIBIL score.
4. Don’t apply for random loans/credit card
Many people apply for loans without thinking or understanding the need, or even if they do need them, they apply to ten different places. But you shouldn’t.
Because every time you apply for a loan or credit card, your CIBIL score is fetched. Many people don’t realize this. Be aware.
Your CIBIL score is affected as many times as it is fetched. Your report is sent to the bureaus, which keep track of how many times a person has applied for a loan or credit card.
One should not take credit cards without any reason and should not take too many loans.
5. Take easy loan & pay ASAP (as soon as possible)
I will explain this point with an example which
Suppose you went to a shop and bought a smartphone which cost Rs 1 lakh. If you wanted, you could have paid in cash also.
But you also saw that monthly EMI is also being given at 0% interest, so in this situation there is benefit in taking EMI.
Now, if you pay off all your EMIs over the next three months because you had so much cash, this will build your credit history, build trust, and your CIBIL score will increase rapidly. In this situation, there are greater benefits to taking EMIs.
6. Don’t check your CIBIL score again and again
You should not check your CIBIL again and again, this also affects your score because whenever you check your score, there is a soft inquiry, although it does not have much impact but it does have an impact.