How to Improve Your CIBIL Score: 7 Effective Method
When you look for a Home Loan, Business Loan, or a Loan Against Property, your CIBIL score is a very important factor in determining your financial status in India. It is a 3-digit number that ranges between 300 and 900, shows how creditworthy you are and impacts your ability to get loans or credit cards. The higher the score, the better the chances that you will be given a loan at lower rates. However, for those with lower ones, it becomes hard for them to access credit at all.
Understanding What Impacts Your Credit Score
Your credit score is a three-digit number that reflects your creditworthiness, and it plays a crucial role in loan approvals. Knowing the factors affecting credit score is essential to improve your chances of securing credit quickly. The CIBIL score is calculated based on multiple parameters, each carrying a specific weightage:
- Payment History (35%)
Timely repayment of loans and credit card dues has the highest impact. Even a single missed EMI can negatively affect your score. - Credit Utilization (30%)
The proportion of credit used versus the total credit limit. Keeping utilization below 30% improves your score. - Length of Credit History (15%)
The longer your credit accounts are active and maintained responsibly, the better it reflects in your score. - New Credit (10%)
Frequent applications for new credit or multiple hard inquiries can lower your score. Apply only when necessary. - Credit Mix (10%)
Having a balanced mix of secured (like home loan) and unsecured credit (like credit cards) shows financial maturity.
Understanding these CIBIL calculation factors helps borrowers take corrective steps to boost their score faster.
7 Actions That Can Improve Your Score Faster
If you are wondering, “How to improve my credit score?” or “How to increase my credit score?” – this article is for you. It provides actionable advice on attaining healthy scores. Next, we shall consider seven guaranteed ways that one can use to up their credit score and make a good financial footing.
Also Read: Why is Credit Score Important for Loans?
1. Pay your bills at the right time
One of the best ways by which you can increase your CIBIL score is by always making sure that you pay your bills in good time. It does not matter if these are credit card debts, EMI payments for loans, or even utility arrears; as long as they get paid before their due dates, your credit history will improve.
If payments arrive late, then this shows negatively on the credit report for up to seven years.
Automate your payments so that you never miss a deadline.
Tip: The easiest way of enhancing creditworthiness in India is to always pay off outstanding dues on time.
2. Regularly Monitor your Credit Report
“Raise your CIBIL score” requires knowing where you currently stand. By checking your credit report, you can identify mistakes or discrepancies that lower your score.
- Get a free annual CIBIL report from CIBIL or any other credit bureau.
- Look for wrong entries, such as paid-off loans that still appear unpaid.
- How do you correct your CIBIL report errors? File a dispute with the bureau to rectify these inaccuracies.
3. Maintain Low Credit Utilization Ratio
The credit utilization ratio is the percentage of total available credit that you use. High ratios show credit dependency, which harms scores.
- Maintain a low credit utilization ratio to have a good CIBIL score.
- For example, if your credit limit is INR 1,00,000, try to spend not more than 30% of it.
Pro Tip: If you're unsure "how to improve your CIBIL score," reducing your credit card spending is an excellent first step.
4. Don’t Keep Applying for Loans
Having too many inquiries in a short period will make you look like a high-risk borrower.
- Before making any new credit applications, work on strengthening your financial position first.
- Research the minimum eligibility standards so as not to be disqualified, which negatively affects one’s points.
This is a vital tip for anyone asking, “How can I improve my credit score?”
5. Create a Credit Background
For instance, if you are someone who has just started borrowing money from any source, then it is possible that your CIBIL score will not exist. This may be achieved by:
- First, begin using secure credit cards that are backed by a fixed deposit.
- Another way is making sure that the money owed is repaid in full at all times.
- One other key point for first-time borrowers is developing a borrowing record.
6. Keep Your Old Credit Accounts Alive
Shutting down former loans can harm your CIBIL score since it shortens your credit history, thus indicating that you have always borrowed irresponsibly. You will receive better interest rates and terms if you have a good credit history.
- To keep an old credit account alight, use your first credit card every now and then, though not regularly.
- Inactive accounts should be checked often so as not to miss fraudulent activities that may occur at any time.
If you are wondering “how to improve your credit score in India” maintaining your credit history is important
7. Mixing Up Your Credit Accounts
CIBIL scores improve when they have a mix of both secured debts like mortgages and unsecured ones such as credit cards. How can you repay many debts in due time while knowing how to use them wisely?
A balance between home mortgages and credit cards is essential if you are seeking secured as well as unsecured forms of borrowing.
- Don’t rely solely on credit cards; consider small loans to diversify your credit portfolio.
- Ensure you repay all debts on time to maintain a healthy mix
This approach is one of the lesser-known tips to raise credit scores.
Also Read: Looking to Check Your CIBIL score? Here’s How You Can Do It Easily
Why is a Good CIBIL Score Important in India?
A CIBIL score above 750 greatly improves your chances of loan approval. In fact, in 2023, nearly 90% of loans in India were sanctioned to individuals with scores above 750. A strong score not only eases approvals but also offers multiple financial advantages.
- Loan and Credit Card Approvals
Lenders prefer borrowers with higher scores, making approvals quicker and more seamless. - Favorable Interest Rates
Strong creditworthiness often leads to lower interest rates, reducing repayment burden. - Higher Credit Limits
A high score allows access to higher credit card and loan limits. - Faster Loan Processing
Lenders process applications faster for low-risk borrowers. - Access to Premium Financial Products
Exclusive offers, premium cards, and specialized loan products are often available only to high-score holders. - Negotiating Power
Borrowers with strong scores can negotiate better terms with banks and NBFCs. - Financial Stability
A consistently high score reflects responsible financial behavior, instilling confidence in lenders.
How Long Does It Take to Improve a Credit Score?
Improving your CIBIL score is not an overnight process. The time required depends on your current score, financial habits, and the extent of issues in your credit history. With consistent efforts, noticeable improvements are achievable within a few months.
- Minor Improvements (1–3 Months)
If your score is slightly below 750, timely bill payments and reducing credit card utilization can bring quick results. - Moderate Improvements (3–6 Months)
For those with multiple EMIs or a higher credit utilization ratio, it may take a few extra months of disciplined repayment to see visible growth. - Major Repairs (6–12+ Months)
If your score is very low due to defaults, missed payments, or written-off accounts, it can take a year or longer of consistent repayment and financial discipline to rebuild.
In short, the timeline varies, but responsible credit behavior is the fastest and most reliable way to improve your CIBIL score.
The Bottom Line
While it’s not something that can be done overnight, with discipline and proper planning, a person can succeed in improving their CIBIL score. Whether you are asking, “How do I raise my credit score?” or need tips on improving your credit score, these steps will help you access better financial opportunities.
Ready to start building your dream home or develop a new venture you have been dreaming of? Apply now for a home construction loan or a business loan and take advantage of achieving your financial goals today!
In addition to this, you can analyze the monthly instalments using the Godrej Capital loan calculator.
FAQs
Q.1. How to increase CIBIL score quickly?
A. To increase your CIBIL score, you can do the following:
- Correct the Errors on Your Credit Report.
- Make Timely Payments.
- Take Starter Loans.
- Limit Your Loans.
- Diversify Your Credit.
- Maintain Your Credit Utilization Ratio.
- Don't Settle Your Loans.
- Plan Your Loans in Advance
Q.2. How can I get a 900 CIBIL score?
A. The first thing you can do is pay your bills early. Ensure all bills are paid 5-7 days before the due date to maintain a perfect payment history. Secondly, ask a family member with an excellent credit history to add you as an authorized user on their credit card.
Q.3. Can I buy CIBIL Score?
A. To check your account number or member details, you can purchase your CIBIL Score and Report.
Q.4. What is the minimum CIBIL score for EMI?
A. A CIBIL Score of 700 or more.
Q.5. Why did my CIBIL score drop suddenly?
A. A sudden drop in your CIBIL score can happen due to several reasons:
- Missed or Late Payments – Defaulting on loan EMIs or credit card payments can significantly impact your score.
- Increased Credit Utilization – Using a high percentage of your credit limit (above 30%) can lower your score.
- Multiple Loan or Credit Card Applications – Frequent applications lead to hard inquiries, which can negatively affect your score.
- Closing Old Credit Accounts – Older accounts contribute to your credit history; closing them can reduce your score.
- Reporting Errors – Incorrect or outdated information in your credit report may lower your score. Regularly check your report for errors and dispute any inaccuracies.
Disclaimer:
The contents of this article are for information purposes only and are not financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise, based on the contents and information mentioned. For more information, please visit www.godrejcapital.com.
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