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How to Improve CIBIL Score by simple ideas?

Your CIBIL Score is one of the most important parameters of your financial health, which gives a comprehensive view of your loan repayment behavior to the lender. A good cibil score can not only help you in getting a new loan, credit line or credit card but can also help you in getting a new loan at a lower interest rate.

A good cibil score can save you thousands or lakhs rupees because on the strength of a good cibil score you can get any type of personal loan, home loan, credit line, car loan or business loan at low interest rate and long time duration. This can help you a lot financially in the form of low interest.

How to improve cibil score

As you know, a credit score of 750 or more is considered a good credit score and on this credit score almost all the banks or loan companies agree to give you a loan. As you see in the above chart what is the criteria to measure your credit score, let us see-

1. Your 30% credit score is determined by whether you have made your previous loan or credit card payments on time or not.

2. The percentage of your secured loans like gold loan, loan against fixed deposit or home loan etc. and unsecured loans like personal loan, credit card etc. determines 25% of your credit score. 3. What percentage of your credit limit you are using determines 25% of your credit score. Using a higher limit can be considered a credit crunch or a lack of financial discipline.

4. In the remaining 20%, all the factors like applying or enquiry for more loans or credit cards etc. determine your 20% credit score. 

      CIBIL Score Down Reasons

A. Failure to make payment of my loan installment or credit card on time irrespective of the reason like money crunch due to any valid reason, job loss due to Covid-19 or delay in salary, closure of business e.t.c. Failure to pay the credit card or not paying even the minimum amount or due to any dispute with your loan provider such as fraud on your credit card or extra charges or annual fee etc. Goes down. If your cibil score was 800 before the payment default, then soon it can come down to 650 or even below if the default is bigger.          

B. Excess or full use of your credit card limit, such as your credit card limit is 50000 / - and you are using 80% to 100% limit, then it is sure to have a negative effect on your credit score.

C. Inquiry for a large number of personal loans or credit cards also lowers your credit score.

D. If you have taken a joint loan like you have taken a joint home loan with your wife, whose installment is being paid by you or your wife and due to some reason I default in the payment of this installment, then both of them have CIBIL Score Down Will come

E. If you have any Add On Card which is being used by your wife or family member and by default in payment of this, the credit score of both the users will be reduced.

F. If you are a guarantor in a loan and the loan is taken by any of your family member, relative or friend and in the event of installment default by him/her and being the guarantor, your credit score will also decrease.

G. If you are a partner, proprietor, director or guarantor in any company, then your credit score will also decrease in the event of loan default of that company.

H. Many times some wrong information is added to your CIBIL score like you have taken loan from any company or bank and you had made any installment payment on time or the loan was closed after paying it in full but the company or bank concerned This information was not given by the Credit Rating Agency in time, due to which it is showing default or loan active in your CIBIL score, even then it will become the reason for falling credit score. In such a situation, it is important that you keep checking your credit report from time to time and in case of any wrong information, ask your loan provider to correct it by email or phone or you can contact the concerned credit rating agency like CIBIL, Experian, Equifax, Crif can get it fixed by clicking on Dispute shown below that loan or by email.

           Tips to Improve Credit Score

1. Pay all your pending loan installments or credit card payments that were in default due to any reason and now you have enough money, then pay them immediately, which will start improving your CIBIL score.

How to improve credit Score

2. Pay all your loan or credit card installments or payments through ECS or Post Dated Cheques so that the habit of making manual deposits at times does not affect your credit score due to busy schedule or forgetfulness.

3. If you have any dispute with your loan provider bank or company like any fraud or wrong transaction with your credit card, high charges or annual fees etc., then resolve it immediately with your loan provider through customer care or email and mutual consent Pay whatever amount is due so that your credit score is not affected.

4. Keep your credit card and loan installments paid at or below 20% of your credit limit. Suppose your monthly income is Rs.60000/- and according to the banking system, you cannot pay more than 50% of your monthly income in the loan installments, as a general thumb rule in the banking system is to multiply your monthly by 100. Your total credit limit is calculated then your total credit limit becomes 30 lakhs that your but if you 50% of your annual income 60000×12=720000/- i.e. 360000/- and 20% maximum unsecured loan and credit card According to the payment, use only Rs 72000 / - annually or 6000 / - monthly so that your CIBIL score is not effected and the rest 80% i.e. 288000 / yearly or 24000 / - monthly you can pay the secured loan like home loan installment etc. .

5. Avoid taking more personal loans of shorter duration and even if required their repayment tenure should be at least 18-24 months otherwise these short term personal loans will negatively impact your credit score.

6. Avoid using credit card limit more than 30% of your credit card limit or 30% of your monthly salary, whichever is higher, otherwise the bank will consider your Credit Hungry or Unplanned Financial Management as well as I will give your CIBIL will also have a negative impact.

7. Limit your total EMI and credit card monthly payment to 40% of your monthly salary, this behavior of yours will definitely increase your credit score.

8. Avoid taking more credit cards and avoid the habit of paying from one credit card to another.

9. Make a habit of making full payment of your credit card on time and if there is any kind of financial crunch, then you must make minimum payment, otherwise your CIBIL score will be affected, the credit card company will also charge you huge interest.

10. If you are feeling financially tight and you have more than one credit card and you want to close any of your credit card then it is better that you do not close your old credit card because with that your long term Key Timely Repayment History is attached which helps you in your CIBIL rating.

11. If your credit score is low due to job loss or business irregularity due to Covid-19, then you can take a loan against Fixed Deposit, Insurance Policy, Mutual Fund, Loan Against Shares, which will give you a very low interest rate immediately. It will be available and it will come under the category of your Secured Loan or you can also take a credit card on Fixed Deposit, although it will not increase your credit score immediately, but when you pay these installments on time, your credit score will gradually increase time to time.

12. You should also see all those loan accounts where you are a guarantor or proprietor or director or partner and there is a negative impact on your CIBIL score due to loan default of someone else, talk to them and try to fill the pending installment.

13. If any wrong entry is showing in your CIBIL Report like any installment paid on time is showing outstanding or any loan has been completely filled by you but in your CIBIL report it is showing Active instead of closed Or if any loan is visible in your CIBIL account which you have not taken, then immediately report it to the local branch of that company or bank on personal or customer care number or through email. You can file your complaint by clicking the Dispute button at the bottom of the report of the concerned credit rating bureau or via email, however, the concerned credit bureau will not immediately remove your misstatement from its credit report, but will ask the concerned company or bank to file your complaint. I will ask for the report and after the report comes in this regard from the concerned bank or company, this wrong information will be removed from your credit report and your credit score will also increase.

Due to any of the above reasons, your CIBIL score has been reduced and now proper action has been taken by you, then keep patience for 6-8 months and gradually it will reach your old credit score increasing.

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