How to increase CIBIL score

Get to know the parameters and how to improve your CIBIL score

Entertainment | written by Anuj Roy | Created: December 16, 2024

Your CIBIL score is a crucial factor that banks or lenders consider when assessing your creditworthiness. A higher CIBIL score often translates to better interest rates and loan approval chances. This article will guide you through effective strategies to improve your CIBIL score and achieve your financial goals.

Here are some ways to improve your CIBIL score

Pay Bills on Time: Punctual payment of credit card bills and loan EMIs is crucial
Pay larger or full due amounts: While you have a provision to pay only the minimum amount due each month, refrain from doing this as much as possible because paying a lesser due amount leaves a bigger credit unpaid amount, thereby reducing your CIBIL score
Limit Credit Card Usage: Avoid overspending and keep your credit utilization ratio low
Avoid Excessive Loan Applications: Too many loan applications can negatively impact your credit score
Monitor Your Credit Report: Regularly check your credit report for errors and discrepancies
Maintain a Credit Mix: A mix of different types of credit, like credit cards, personal loans, and home loans, can positively impact your score

It is a good practice to be aware of what actually goes into the calculation of CIBIL score in India.

The following parameters are considered when calculating a CIBIL score

Payment History (35%): This is the most crucial factor, reflecting your ability to make timely payments on your credit accounts.
Credit Utilization Ratio (30%): This refers to the percentage of your available credit that you're using. A lower ratio is generally better.
Credit History Length (15%): A longer credit history with responsible management can positively impact your score.
Credit Mix (10%): Having a mix of credit types, such as credit cards and loans, can improve your score.
New Credit Inquiries (10%): Too many recent credit inquiries can negatively impact your score.