Having Low Cibil Score? Use These Steps To Improve It

CIBIL score is a numeric summary of an individual’s creditworthiness. Typically, a credit score of 750 or higher is deemed favorable for availing a loan.

Individuals with a high CIBIL score are more likely to gain the approval for an advance through an instant loan app or physical application than those who have a poor CIBIL score. 

Nevertheless, a significant number of credit seekers often face rejection on their loan application because of low CIBIL score. Absence of any credit history or cases of previous loan defaults can cause one’s CIBIL score to reduce by a significant margin. Such applicants should improve their CIBIL score to prevent their loan applications from being rejected.

There are several ways that Individuals may follow to improve their credit rating. Let’s take a look at those factors – 

~ Pay dues on time – Borrowers should make it a point to pay their debts on time. Timely payments help to improve credit score and also allow individuals to avoid any late payment charges that might be levied as a penalty.
Also, having a fair track record of repaying dues on time would work in favour of borrowers when they intend to avail a loan through any reputed personal loan apps.

~ Avoid ‘minimum due’ option – Credit card users should avoid the minimum payment facility. Even though most lending institutions extend the option for paying the ‘minimum due’, individuals should try to repay the total debt in time.
Such a balance is usually 5% of the due amount. By opting for the minimum due option, individual may escape the charges associated with late payment, but they would still have to pay interest and taxes on their outstanding due.

~ Keep the credit utilisation ratio low – Such ratio can be defined as the amount of credit used by borrowers from the total amount of credit offered to them. At any time, individuals should try to maintain a low credit utilisation ratio by using only a portion of the credit offered to them. A ratio below 40% would prove effective in improving their credit score.

Additionally, borrowers can use loan apps like Bajaj Finserv App – Experia to keep track of their utilised credit, debt repayments and also to access their card’s credit statement.

~ Avoid debt settlement – Some financial institutions may offer individuals the option to settle their debt to help them manage their piling debt burden. Though it might seem helpful, it indicates borrowers’ inability to repay their debt on time. Such action tends to lay a negative impact on their CIBIL score and also hampers their scope of availing a new loan through an instant loan app.
Using old credit cards – Keeping an old credit card active often comes handy for individuals who want to improve their CIBIL score. By making smaller transactions through an old credit card, individuals can enhance their credit utilisation ratio, repayment history, and credit report. It will directly help them to improve their CIBIL score as well and will prove effective in availing easy loans from financial institutions at competitive rates of interest, easy repayment option and convenient tenure.

Financial institutions offer several benefits to eligible applicants that carry high CIBIL score. For example, Bajaj Finserv provide pre-approved offers that make availing loans a hassle-free experience. Such offers are available on several financial products like personal loans, business loans and home loans. You can check your pre-approved offer by offering some basic details, including your name and contact number.

~ Limit the number of accounts – Multiple credit card holders can improve their low CIBIL score by limiting their number of active accounts. Having too many accounts may add on the already existing debt burden of a borrower, making it difficult for them to repay their aggregate debt. Moreover, credit bureaus are also likely to consider an individual credit-dependent if he or she has too many revolving credit accounts. Such a practice would, in turn, lay a negative impact on their credit score and low lower it with time.

Other than these, individuals should check their CIBIL report thoroughly to identify and report discrepancies at the earliest to restore their CIBIL score. Similarly, limiting spending habits will keep the due payment low and help with repayment. It would allow their CIBIL score to improve gradually. 

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