How to improve your CIBIL score

How to Improve CIBIL

What is Credit score ?

Credit score is a three-digit numerical value that ranges between 300-900 depending on how you have managed your loans and credits in the past. Credit score helps banks, lenders and credit card companies decide whether you qualify for the loan and it also helps decide the interest you’ll be paying on the loan you’re taking. 

Credit score basically represents the creditworthiness or loyalty of a person in repaying the loan. To get a loan approved by financial institutions like the bank or loan providers, you must have a credit score between 750-900. With a credit score closer to this, you may be able to get a loan but with higher interest rates. 

Once you apply for a loan, the loan providers or the bank sends the lenders’ data and monthly history to a credit bureau like CIBIL or Experian, where the bureau using its algorithm calculates the lender’s credit score depending on various factors like how many loans or credit cards you have taken or used, the type of loans you have taken in the past and whether you have repaid all your loans on time. The credit bureau generates your credit report every month based on these factors – all these factors play a major role in calculating your credit score. 

Improving Credit Score

If you want to apply for a loan but you have a low credit score then you must do the following things to improve your credit score…

  • Make all your EMI payments on time. Paying your EMIs will not only improve your credit score but also save you from penalties and extra waste of money.
  • Customize your credit limit according to your expenses. It is always better to spend 30% of your credit limit to maintain and improve your credit score. Reaching your credit limit or crossing 30% of your credit limit will have a negative impact on your credit score.
  • Maintaining old credit cards as a good credit history over the years can help you to easily elevate your credit score and improve it.

Do’s & Don’ts

  • Avoid taking multiple loans at a time. Taking too many loans at a time will make it difficult for you to pay the required amount on time. This will not only hurt your credit score but also give rise to major repercussions, having to pay penalties on all those loans for not being able to repay them within the given time.
  • Opt for a loan with longer tenure. Taking a loan with a longer tenure, you will have to pay low EMIs every month and it will be easier for you to repay the EMIs on time and improve your credit score. 
  • Track your accounts by maintaining both secured and unsecured credit cards as this helps to maintain your credit score. 
  • Keep checking for any mistakes in your credit report. Any incorrect information in your credit report will also reduce your credit score. 
  • Make sure to not miss any payments. Keep checking regularly if you have cleared all your payments on time. In case you miss to make a payment on time, your credit score will fall immediately and you will also have to pay the penalties for missing the payment.
  • Limit your unsecured loans up to 20%. Do not build up a high amount of unsecured debt. Having too many credit cards or personal loans will hurt your credit score. 
  • Avoid taking joint loans. If you have taken a joint loan and one person among you fails to repay the amount, the credit score of all the borrowers is affected. 
  • Adopt for automated payment modes as you will not have to worry about paying the loans on time or missing any payment. It is better to always pay your EMI and bills before spending on any other expenditure as this will reduce your burden and may also help you in saving some money. 
  • In case of any dispute with the lender, settle it immediately and pay the agreed settlement amount.

If you want to apply for a loan, you must meet the lender’s requirements of the credit score for easy loan approval and processing. It is easier for a salaried person to get approved for a loan as he can get a loan with the help of his salary slip, unlike a businessman. It is necessary for businessmen to have a good credit score in order to get the loan approved.

How to build Credit Score

In case you haven’t started building up your credit score yet, the following are the best ways to start building a credit score from zero.

  • So the next time you’re going to buy some household item or an electronic gadget like a fridge or a washing machine or a mobile, instead of paying in cash, choose an EMI plan as this will not only prevent sudden flow of cash from your account but also help you to build a credit score. Make sure you pay the EMIs on time. 
  • Issue a credit card even if it has a low credit limit and use your credit card to make payments even for the basic things and keep paying the credit on time. This will build a good payment history and Inturn improve your credit score. 
  • Create a fixed deposit so you will be provided with a secured credit card with a credit limit not so high. You need to use this credit card to buy stuff and repay the amount on time in order to build your credit score.
  • Limit your EMIs up to at least less than 40% of your salary or monthly income. 
  • Try to have only one credit card initially, this will help you in maintaining your credit score as you don’t have to worry about expenses from other credit cards. Having only one credit card can also help you limit your expenses and keep track of your credit score. 


In general, to build or improve your credit score, you must repay all your EMIs and payments on time. Delaying the payments will drastically reduce your credit score and this will in turn prevent you from getting approval for any kind of loan from financial institutions.



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