Your creditworthiness is measured by a CIBIL score, which is displayed in a numerical manner. It varies from 300-900, and you should always work to raise your CIBIL score so that it is nearer 900. If you like to know how to improve cibil score immediately, focus more on improving the CIBIL score and avoid the slip-up that causes the score to go down.
You will be in a better position to get a better deal on the interest rates when applying for a loan or a credit card if you have a high CIBIL score. Most lenders, including banks and non-banking financing companies (NBFCs), prefer to grant credit cards or loans to borrowers with CIBIL scores of 750 and higher. A poor CIBIL score, however, makes it more difficult for you to obtain credit. So, in order to keep your CIBIL score good, you must use your credit card responsibly and use CIBIL score calculation from time to time.
There are many factors that affect the CIBIL score, and each of the factors has a different weightage. Due to a number of factors that can either take your CIBIL score down or up, you need to be careful and avoid a couple of mistakes. A simple google search on how to improve cibil score immediately will let you know the mistakes you should avoid. Let’s take a look at some of the mistakes that can negatively affect your CIBIL score.
Not paying bills on time: The most important factor that significantly affects your CIBIL score is your payment history. Do you know your repayment history accounts for 35% of your CIBIL score? As a result, it’s crucial that you pay all of your bills and EMIs on time. Any amount of knowledge on how to improve cibil score immediately will not work if you do not pay your bills on time. Your CIBIL score can decrease if you delay or pay bills after the due date. If it is required, set up reminders on your phone to be sure that your CIBIL score is not negatively impacted. Another choice is to set up an automatic debit facility to pay your credit card payments on a predetermined day. By doing this, you’ll avoid missing any credit card payments and keep your CIBIL score high.
Maintaining a high credit utilization ratio: Your credit utilization ratio is the proportion of your available credit that you are using at any one time. If you wish to raise your CIBIL score, keep your credit utilization percentage low at all times. Essentially, this means you should limit your usage and avoid exceeding your credit card limit. Do you know using up your entire credit card limit suggests that you are unable to pay your payments on time? This is why many financial professionals, when asked how to improve cibil score, immediately advise individuals to spend no more than 30% of their whole credit card limit. 30% of your CIBIL score is determined by your credit exposure. Your credit score will immediately decline if you have a high credit utilization ratio.
Availing of several unsecured loans: It’s crucial to maintain a balance of the type of loans that you avail of. Therefore, it is recommended to have both secured and unsecured loans because doing so will raise your CIBIL score. While credit choices like home loans will help you raise your CIBIL score, many unsecured loans will lower it. You must know your cibil score calculation for the credit you have is 10 percent.
Making multiple credit inquiries: If you have just started using a credit card, it is best to use one credit card at a time. Handling several credit cards at a time can get overwhelming because you risk losing track of your spending. Additionally, it becomes challenging to recall the dates on which various credit cards have payments due. Credit inquiries account for 10% of your total CIBIL score. Therefore, it is best to avoid making several credit inquiries at once because doing so will lower your CIBIL score. Additionally, it makes you appear credit-hungry.
Having little or no credit history: Your cibil score calculation is 15 percent based on the length of your credit history. Credit histories give lenders insight into your credit behaviour over time. Therefore, having a credit history is preferable to banks.
Not checking your CIBIL report over time: Do you know you can get an overview of your current credit status by periodically checking your CIBIL report? Additionally, occasionally, mistakes in your CIBIL report can lower your CIBIL score. Your CIBIL report includes personal data about you as well as information on all of your credit. Duplication of credit accounts or errors in your credit account might have a negative effect on your CIBIL score.
Closing old credit cards: It is very much possible that your old credit cards that have been closed may have a lengthy credit history. Long credit history is important for a borrower since it gives your application for a loan or credit card more weightage than others. Therefore, keep old credit cards and credit accounts open for cibil score calculation for as long as it’s possible but also ensure you clear your dues, if any.
Being a guarantor without giving much thought: What would you say if your friend took out a home loan and asked you to guarantee it because they had helped you with so many personal finance issues? In a personal finance matter, always think calculative. Your CIBIL score will suffer if they ever default on it or can’t pay the amount on time.
What we are saying is,
There is no sure shortcut on how to improve cibil score immediately; knowing the cibil score calculation of factors and avoiding the aforementioned mistakes, you will certainly be able to improve your CIBIL score. While you should do everything to avoid slip up, make sure you also follow these tips consistently to avoid a dip in your CIBIL score.