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News India Live, Digital Desk: Has it happened to you too that you applied for a loan (be it home loan, car loan or personal loan) for some important purpose and the bank refused? In most cases, the real villain behind this “no” is your poor CIBIL score. This is that magical number, seeing which the bank decides whether it should give you a loan or not.
If your CIBIL score is low, there is no need to panic. This is not set in stone and cannot be changed. The good news is that by adopting some good financial habits, you can improve it and open loan doors for yourself.
Let us understand today in simple language what is this CIBIL score and how it can be improved rapidly.
After all, what is CIBIL Score?
CIBIL Score is a 3 digit number (between 300 to 900), which acts like your financial report card. It shows how responsible you have been in repaying the loans or credit card bills you have taken so far. The closer your score is to 900, the more reliable a customer you will be in the eyes of the bank. Generally, a score above 750 is considered very good.
Follow these 5 methods and improve your CIBIL score
1. Always pay EMIs and bills on time
This is the first and golden rule to improve CIBIL score. Be it your loan EMI or credit card bill, always pay it before the due date. Delay of even one day can have a negative impact on your score. Set a reminder in your phone so that you never forget any due date.
2. Use credit cards wisely
Banks give you a good credit card limit, but it does not mean that you exhaust the entire limit every month. Try not to use more than 30% of your total credit limit. For example, if your limit is Rs 1 lakh, then keep your expenses around Rs 30,000 only. This makes the banks feel that you are not too dependent on loans.
3. Be sure to check your CIBIL report
You must check your CIBIL report at least once a year. Many times it happens that due to some mistake of the bank, a loan or credit card appears in your report which you never took. Get such mistakes corrected by immediately reporting them to CIBIL, because it can unnecessarily spoil your score.
4. Avoid applying for loan again and again
Whenever you apply for a loan, the bank checks your CIBIL report, which is called ‘hard enquiry’. If you apply for loan in many banks in a short period of time, then a lot of inquiries start appearing in your report. This signals to banks that you are very desperate for a loan, which is not good for your score.
5. Create a good ‘credit mix’
Banks also see how responsibly you can handle different types of loans. If you have a good mix of secured loans (like home loan, car loan) and unsecured loans (like personal loan, credit card), then it is considered positive. This shows that you are capable of handling every kind of financial responsibility.
Remember, CIBIL score does not improve overnight. It takes time. But if you continuously adopt these good habits, then in 6 to 12 months you will definitely see a good improvement in your score.
