How to Improve CIBIL Score Immediately
Before directly jumping to ‘How to Increase my CIBIL Score Immediately’, you should know what CIBIL is. CIBIL is one of the four bureaus of credit in the country that generates an annual report based on your credit score. Your CIBIL score is a true reflection of your entire credit history. Your CIBIL score plays a huge role in your life as all the lending institutions provide you with a loan based on your CIBIL score as it is this score that becomes a parameter to judge your credit worthiness.
In the current times, most of the lenders now bucket the customers under different classifications based on the CIBIL score. The fact is simple: the better the CIBIL score, the easier it will be for you to get a loan.
CIBIL score ranges from 300 to 900 where 300 in the least and 900 is the highest. Here are the brackets of the score:
- 300 to 549- A score in this range is considered poor
- 550 to 700- A score in this range is deemed to be average
- >700: A score above 700 is considered to be good.
For a personal loan, the minimum CIBIL score one requires is 700 or above. However, the credit score does not stay permanent, and it can change with time.
Here are some of the effective ways of how you can improve your CIBIL score immediately:
1. Repay All the Credit Card Dues on Time:
The immediate answer to the question ‘How to increase my CIBIL score immediately’, is by paying the credit card dues on time. Getting into the habit of paying the one monthly amount, which is due, that appears on the credit card statement does help in preventing the late charges and also at the same time increases your goodwill. The maximum amount which can be due in about 5% of the entire bill in that cycle. However, reaching a level of the maximum amount can lead to your paying interests, and also taxes get laid on the bill, which gets added to the next billing cycle, and this vicious cycle keeps going on and on.
2. Limit Credit Utilization:
To improve your CIBIL score immediately, it is always better to limit all your credit utilization for a while and only use it during a time of emergency. Using less than 30% of the limit on the credit card can help you prevent damage to the credit score. Also, not using a credit card even a little has an adverse effect on the credit score.
Hence, the best advice on improving CIBIL Score is to pay the credit card dues timely. It is now a wise option to use more than 30% of the credit card, considered ‘High Utilization’. Thus, it is always better to opt for a higher credit limit, which can also help increase the credit score faster. Moreover, a limit on applying for multiple loans also adversely affects the score.
3. New Credit Cards:
You should be prudent while you are applying for a credit card. No doubt credit cards are considered helpful while you apply for loans, but anything in the extreme is bad. Having an excessive number of credit cards can lead you to make a high volume of purchases, which can prove to be counterproductive in the end.
While you apply for a credit card, in that process do check your credit eligibility and then apply to banks where you have higher chances of your loan getting approved. It is because applying to multiple banks for a loan can also affect your credit score. Make sure you maintain a gap making applications in such a way that prevents the lenders from believing that you are desperately chasing credit.
4. Keep a Close Check on The Credit Report:
As per a Federal Trade Report, approximately 20% of the customers were found having an error in their credit report. Hence, you must regularly check your credit report as it is the primary solution for increasing CIBIL Score Fast.
The credit bureaus have a legal obligation to offer the borrowers one credit report free each year. Doing an annual check also can keep you in the right space, as you can spot an error if there is any on time and get it corrected immediately. Currently, online marketplaces have simplified the entire process of credit history monitoring.
5. Opt for Different Types of Credit:
If you are someone who has never obtained credit, then you are bound to have a lower CIBIL score, which makes it difficult for you to get a loan easily. Hence, in such a case, you must include multiple types of credit in the portfolio that could have a proper mix of personal, short-term loans and secured loans, which can help you increase your credit score.
This one single step alone can help you improve the chances of availing a higher amount of loan that too at a lower rate of interest when you decide to apply for a loan for any reason.
6. Increase the Credit Limit:
As simple as it can get, just by increasing the credit limit, you can immediately lower the credit utilization ratio and boost the credit score. By over-utilizing, the credit that is available for you can end up in credit scoring models, which could put you in a high-risk borrower category.
In case, you are in the habit of utilizing your entire credit limit or sometimes even beyond the credit limit, this will push your credit utilization ratio up, which will, in turn, increase your default risks.
Although the risk quotient does depend on you, one thing is for sure that your credit score will get impacted negatively. Hence, before any additional spending, make sure you increase your limit. By doing this one step, you do get a chance to manage the credit wisely and at the same time keep the credit utilization low.
7. Keep the Old Debt on the Report:
Your credit score is a primary reflection of your past behavior in terms of handling credit, and based on your experience, the lender goes on to approve the loan. Therefore, you should do a practice to keep your old good loan accounts in good condition, as this can help you when you apply for a loan.
After all, any debt that is repaid in the agreed timeline and terms increases the creditworthiness and leaves a very positive impact on the application. Another effective way to help you with ‘How to Improve CIBIL score Immediately’is by keeping your accounts active where you can get a solid repayment history for a long duration.
8. Never Give a Risk of Hint:
The credit score models are designed to pick all the initial signs of stress in the borrower’s portfolio. There are many instances which can be drawn, such as:
- Missing the payment deadlines of credit card
- Paying less than the due amount
- Taking advances of cash
- Using credit cards to meet the business expenses
All of the above-stated signs show stress in the borrower’s profile, which ends up hampering the CIBIL score negatively.
9. Avoid Applying for Multiple New Credit Lines:
It is simple, opening a new credit line directly increases your credit limit. However, on the side, it might allow you to spend more, on the other side, each application for a new credit line ends up creating a hard inquiry on the credit report.
Hard inquiry related to your credit profile’s detailed analysis ends up assessing the amount of risk you can handle as a borrower. A hard inquiry does reflect on your credit report for 24 months.
Hence, considerable amounts of hard inquiries in a short period do affect your CIBIL score negatively. When hard inquiry becomes the cause of the rejection of a loan application, it affects the score negatively.
10. Be Persistent and Patient with the Approach:
You should know that the answer to your question, ‘how to increase my CIBIL score immediately’ will always be ‘It Takes Time’. Credit score cannot improve in 24 hours, and having such dreamy expectations is wrong. Increasing the CIBIL score does take considerable time and effort to repair.
Hence, you must be patient and make sure to continue your credit report, spending patterns, credit lines, etc. Also, make it a habit to pay your debts on time.
No doubt, to repair a CIBIL score is an uphill task, but it can always be achieved with utmost passion, discipline, and dedication. You are always on a winning bet if you maintain a good CIBIL score.