You must practise disciplined credit management to maintain a good CIBIL score. Though your CIBIL score will not improve overnight, there are several steps you can take to improve it. It can take six months to a year to improve your CIBIL score. To have a high CIBIL score, you must be disciplined in your repayment habits and credit management systems. A CIBIL score close to 900 can qualify you for a variety of benefits that come with a high CIBIL score. However, just because you have a high score does not mean that it cannot fall. To keep your CIBIL score and its benefits, you must maintain your good practices. Similarly, if you have a low CIBIL score, you may face a number of disadvantages when applying for any type of credit in the market. If you have a low Credit score, lenders may charge you a high interest rate on your loan application.
Improvement Measures
If you have a low CIBIL score and want to improve it, there are a few steps that you should take. The following are a few measures you can take to improve your CIBIL score:
Making On-Time Repayments
Pay your loan EMIs and credit card bills on time if you want to keep your credit score high. Regular EMIs demonstrate responsibility to the bank and can help you improve your CIBIL score.
Loan Types
You can improve your credit score by combining secured and unsecured loans. Because you will not be providing any form of collateral to the bank, applying for only unsecured loans may give banks the impression that you are a high risk borrower.
Keeping a low Debt to Income ratio
While loan repayments can reduce the amount owed over time, it is also advised that you do not frequently exceed your credit card limit, as this will have a negative impact on your creditworthiness.
Do not apply for more than one Credit
Applying for multiple credit cards at the same time may appear appealing because it is a quick way to get cash, but managing too many credit cards can be difficult at times, and missing even a single EMI will harm your credit score.
Maintaining Old Accounts
Keeping an old debt on your credit report and paying its EMIs on time portrays a positive image of your dependability and can help you improve your credit score.
Benefits of High CIBIL Score
There are numerous advantages to having a high CIBIL score. Some of these advantages are as follows:
Reduced Interest Rates
If you have a good credit score, you will almost always be able to get the best interest rates and pay the least amount of finance charges on credit card balances and loans. If you pay less interest, you will be able to pay off your debt faster.
Simple and easy Loan and credit card approvals
When you have a high credit score, your chances of obtaining credit improve. In general, you should not be afraid to apply for a loan or a credit card. Because banks consider you creditworthy for the loan if you have a high CIBIL score, they are more likely to approve your loan or credit card application.
Negotiating power
If you have a high credit score, you may be able to negotiate lower interest rates on credit cards and loans. If your CIBIL score is low, the bank will charge you a high interest rate on your loan application. If you have a low CIBIL score, you will be unable to further negotiate the terms with the bank.
Simple Loan Top-ups
Because banks will assess your credit score and consider it to easily add some money to the existing loan amount, you can easily apply for a top-up and increase the loan amount on an existing loan.
These are some of the benefits that come with a high CIBIL score. Furthermore, having a high CIBIL score does not guarantee that it will remain so. To receive these benefits and advantages, you must maintain your CIBIL score. If your CIBIL score falls, you may face a slew of negative consequences. It is recommended that you create a CIBIL score login to keep track of your credit score and reports on a regular basis.
