A good CIBIL Score is a basic need to qualify for any loan. Whether you need a home loan, car loan, or even a credit card, your CIBIL score is always acknowledged at first.
Every banking or non-banking firm takes your CIBIL score into account before offering you desired loan amount. That's the reason it's crucial to maintain a healthy credit score is a must. With a good credit score, you can apply for financial assistance anytime you want without facing rejection.
What's a CIBIL Score?
CIBIL score is a three-digit number that varies between 300 and 900 based on various factors. This score helps the baking firms know about your credit history, including how much you spend and how much you repay your bills, EMIs, etc.
Now, the most important question is what a good credit score is?
It's is evident that the higher the score, the better your chances of getting your desired loan amount. Still, a CIBIL score between 700-900 is considered a good credit score.
Those with a good credit score have nothing to worry about and stay assured of any financial services. However, numerous people have a bad credit score or a score below 700. Such customers always look for practical options that can help them increase their CIBIL score.
Don't worry! Below we are sharing 7 hacks that will help you improve the CIBIL score by minimum 100 points.
Hack 1: Take a Secured Credit Card:
Getting a secured credit card means you are getting a credit card against your FD. This is a great way to improve your CIBIL score in a short period. If you continue repaying the credit card bill properly, you will experience a good hike in your CIBIL score within a year.
Most of the banks provide you secured credit cards. All you need to do is repay the bills timely. If you repay the dues without default, you have a high chance of improving your credit score.
Hack 2: Take a Home Loan:
Credit cards and personal loans are often considered as bad credit as they compel the user to spend more than their repayment potential. However, a home loan is considered good credit as it adds an asset to your list and lets you repay the EMIs every month.
Make sure you get the home loan on your name, as getting a home loan on another's behalf won't work for your CIBIL score.
Hack 3: Use Educational Loan:
Education is always the basic necessity to grow, but not everyone is financially capable of affording higher education. In such a scenario, you need an educational loan to grow your personal and professional skills. Simultaneously, it will also help you improve your credit score.
Make sure you take an education loan only if you are planning higher studies. Getting a loan unnecessarily will add a burden mentally and financially.
Hack 4: Increase Your Credit History:
It is a common phenomenon that humans always trust the one they have known for years. Similarly, if you already have had ongoing loans for years and have regular & timely repayments, your credit score will definitely experience a hike. If you have any long-term loans, prefer not to close them as such a loan helps you remain at the high trust level. However, you should ensure your EMIs and bill repayments are made timely.
Hack 5: Keep Your Expenses Within 30% of Credit Limit:
Everyone has a credit limit, i.e., the maximum amount a bank or NBFC can give you. However, it is a golden rule never to take 100% of your credit limit. Applying for a 100% credit limit means you are in an emergency and at a high risk of repaying the dues.
That's the reason it's better to keep your expenses below 30% of the credit limit. In short, whatever loan you are applying for, make sure the total sum is within 30% of the credit limit.
You can reach the limit once or twice, but it's better to plan your repayment before applying for such a credit limit.
Hack 6: Keep Using Your Credit Cards:
Most people today own at least one credit card. Hard cash is highly effective in handling your emergency expenses. Furthermore, your expenses via credit card are considered in calculating your credit score. Once you reach a good CIBIL score, your bank can offer an increased credit card limit.
It's essential to note that you should never spend 100% of your credit card amount as it will become challenging to repay the entire sum within a given time frame.
Nowadays, numerous banks and NBFCs provide you the option to pay your expenses in three EMIs. Still, you should prefer repaying entire expenses on time and maintaining a green credit card. Regular usage and bill repayment on your credit card will boost your CIBIL score to a significant level.
If you are a regular credit card user, it's easy to reach above 800 CIBIL score within a few years.
Hack 7: Take Instant Jumbo Loans:
Many of you have received calls for instant jumbo loans. Interestingly, people with satisfactory or good credit score get such calls. However, what's more important is that these jumbo loans help you improve your CIBIL score by 100s.
The best aspect of jumbo loans is that they don't require paperwork. Most banks provide you instant jumbo loans which are credited to your account within a few hours. Getting such a loan helps you improve the CIBIL score.
Additional TIP: Regularly Track Your Credit History:
Until you are not tracking your CIBIL growth, it's tough to acknowledge your efforts. It's important to check your score regularly and acknowledge its growth or downfall. If you follow the points above, you can definitely increase your credit score.
So, if you are serious about your CIBIL score can do wonders in your credit history and boost your score. Along with hacks to increase your CIBIL rating, it's also important to know what are the reasons behind a bad credit score.
Below are the reasons behind a bad CIBIL score
Poor Payment Record: Your payment history is the most crucial component of your CIBIL score. If you fail to repay the bills, EMIs on time, it will harm your credit score. Many users even become defaulters that decrease their credit score drastically. With every missed payment, your credit score declines and reaches closer to 300.
High Credit Utilization Ratio: The credit utilization ratio is derived by dividing the used credit by your credit limit. A high credit utilization ratio is always a trouble for you and declines your CIBIL score. A high credit utilization ratio means you have a higher dependency on the credits and are burdened with a heavy repayment amount. Credit utilization ratio above 30% is always a concern to think about.
Submitting Multiple Requests for Credit: Your credit history is checked every time you apply for new credit. Interestingly, the number of times your credit history is checked is also considered in the CIBIL score. When several lenders check your credit score within a short time interval, it becomes hard to maintain a good credit score. Your increasing credit hunger can decrease your CIBIL score.
Any Error in CIBIL Report: Sometimes, having a bad credit score is not at all your fault. Instead, there are cases when your CIBIL report has some incorrect information that results in a low CIBIL score. That's the reason you should timely check your credit score and inform the bank in case you find any glitches.
Having Too Much Unsecured Debt: Yes, you can take unsecured loans to some extent, but it's never a good practice to entirely rely on them. Having a large outstanding sum of unsecured credit will always affect your CIBIL score. Using your credit card too much or taking a personal loan will always affect your credit score.
So, you should always consider the CIBIL score in your financial journey and put your best efforts to keep it above 750.
Finance experts always suggest you retain a good credit score as it comes with various benefits, including low-interest rates on loans, high credit utilization ratio, and quick customer services.
Most experts even suggest you create a mix of credit that helps you maintain a good credit score. It means you shouldn’t rely entirely on a single credit option; instead, you should create a mix of home loans, credit cards, jumbo loans, and other options. In all, what you should do is maintain timely repayment of all EMIs without fail. Missing any EMI will take you towards defaulter, and hence it will become tough to maintain a good credit score.
Years back, people with bad credit scores were not allowed to take loans. However, it has changed today. Presently, customers with low credit scores are eligible for some loans but are offered with high-interest rates. Some banks even suggest giving a collateral loan to customers with a bad credit score.