Guaranteed Tips To Increase Your CIBIL Score Fast
Do you want to improve your CIBIL score? Follow this step by step guide to increase your credit score immediately with IIFL Finance!
Approval for any loan that a person takes, whether for personal or business purposes, depends primarily on two aspects—the value of the security provided and the person’s CIBIL, or credit, score.
In fact, for unsecured loans, which do not require the borrower to put up any security, the CIBIL score assume even more significance. The CIBIL score is a critical factor is deciding not only the amount approved and disbursed, but also affects the speed at which the loan is sanctioned and the interest rate charged.
What Is CIBIL Score?
A CIBIL score is given using predetermined criteria based on a person's credit history. This includes aspects such as outstanding personal loan or a secured loan that the person may have. Additionally, it considers things like how often credit cards are used by the person and how well monthly dues have historically been repaid.
The three-digit CIBIL score falls between 300 and 900. A high CIBIL score assures a lender that the borrower is financially responsible and has repaid prior loans on time, in full, and with interest in addition to having a reliable source of income from a business or job.
On the other hand, a low CIBIL score informs the lender that the borrower is a high-risk customer who has a history of making late payments or may have even defaulted. Additionally, it suggests that there is a strong likelihood that the borrower would default on the loan due to the possibility that their financial situation and income are unstable.
However, there are some guaranteed ways to improve your CIBIL score.
Tips To Increase CIBIL Score
• Check All Loans:Any credit outstanding against a person’s name has a bearing on the CIBIL score. So, a person must sit down and make a list of all the loans that they have taken and are still to be repaid. They should try to bring the amount down by repaying some of these loans and by ensuring that they are paying all equated monthly installments, or EMIs, on time.
• Credit Card Dues:One should clear all outstanding dues on credit cards and make a habit of it. Any unpaid bill on credit card pulls down the CIBIL score and it takes months of regular payment to lift the score to the earlier level. Also, one should ensure repayment of the complete bill and not just the minimum amount due. This not only saves on interest payment, but also brings down the overall loan against the person’s name, helping increase the CIBIL score.
• Credit Card Usage:Credit utilisation ratios are also included in the CIBIL score. Accordingly, it is considered a warning indicator if a credit card is used entirely every two months. In fact, credit card providers frequently offer to raise credit limits, and doing so lowers the utilisation rate automatically. A person should ideally try to keep the utilisation rate of a credit card below 30% of the limit to help increase the CIBIL score fast.
• Loan Inquiry:Now that it is so simple to access the internet, mobile users frequently examine offers and inquire about loans even when they don't need them. But since lenders interpret these inquiries as a sign that the person is looking for debt and shopping around, it might have an impact on the CIBIL score. A borrower who submits too many loan requests to different lenders may seem to be overly eager to obtain one. Credit cards also fit within this category. So, keep the inquiries low to increase the CIBIL score.
• Check CIBIL Report:Sometimes, the CIBIL or credit score may have captured erroneous data. Prospective borrowers should check their credit report to spot such wrong data and bring it to the attention of the lenders. To report mistakes in the CIBIL report, go on to its website. It takes around 30 days for CIBIL to resolve such disputes depending on the response time of the lenders.
• Credit Mix:Large unsecured loans versus low secured loans tend to drag down the CIBIL score. It would be ideal to keep the credit mix healthy with more mortgaged loans than unsecured ones to improve the CIBIL score. Similarly, a person should repay unsecured loans first before paying off secured debts.
• Seek Higher Credit Limit:Higher credit limit brings down the utilisation rate and helps improve the CIBIL score instantly. A borrower can always request their credit card company to raise the limit based on the repayment history and income level.
Prepayment of outstanding debt, especially of unsecured loans, and a reduction in credit card usage can help raise your CIBIL score fast. Spotting any errors in your credit report and getting those corrected can help, too.
The CIBIL score is an important factor that lenders, including non-banking finance companies such as IIFL Finance, consider before approving a personal or business loan. IIFL Finance provides business and personal loans through an online application process that shortens the turnaround times. The company offers unsecured business loans of up to Rs 30 lakh and personal loans of up to Rs 5 lakh at competitive interest rates.