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Effective ways to improve bad CIBIL score!

A bad CIBIL score is the most horrifying thing to have if you are in middle of the emergency like health problem or paying a debt for which you need to apply for the loan. With some other criterion which the banks have for availing the loans the verification CIBIL score is also made mandatory as per the guidelines of Reserve Bank of India in order to establish the qualification of the individual to get the loan. This means that, if you have low CIBIL score, you are not eligible to get loan from the conventional finance providers because of your past financial activities.

What is a CIBIL report?
CIBIL report of a person is the record of loans and credit card details with history of repayment. It is checked for the regularity of repayment. This information helps to understand the financial behaviour of the person and guides the banks to generalise the potential of the individual for future repayment.

What is a good CIBIL score?
A CIBIL score more than 750 is considered as good while anything below 350 is considered as bad. Once your score goes low it takes time to increase and you will face problems in getting loan. So, here are few ways which can help you to increase your CIBIL score.

  1. Don’t apply for new loans- Once you understand that your CIBIL score is low, don’t put applications for new loans as it will get rejected resulting in more fall in your score.
  2. Limit the use of credit card- The credit card usage plays the vital role in CIBIL scores. So, make use of it in sensible manner. Stop yourself from using it more than 70% of its upper limit. Also, pay the credit card bills in stipulated time. This will surely help to improve your CIBIL score.
  3. Use the older credit card- We often think to deactivate the credit card which is not in use for long time with consideration that it will have bad effect on the CIBIL score. I think the other way. I must say, if you use a credit card with good record of repayment will be like booster for your CIBIL score.
  4. Consolidate all the debts- One of my relatives had bad CIBIL score in Delhi NCR with smaller loans here and there. It was almost impossible for him to manage all the loans at a time and due to his inability to repay few of them his score was going down more. If anybody is in such situation, I will suggest that, try gain a bigger loan in order to pay all the small ones. It will be easy for you to manage it and also to improve your CIBIL score.
  5. Know the reasons- If your CIBIL score is going down, try and find out the reason behind this. Understand what is actually going wrong and make efforts to overcome the cause.
  6. Don’t misuse the loan- Sounds weird but it’s true. Few days back I met a person whose had low CIBIL score in Delhi NCR for the reason of utilising the loan amount for the purpose other than he showed to the bank. Never ever do this. This will definitely going to reduce your CIBIL score.

So, these are few tips which can help you to improve your bad CIBIL score. Try to follow this and avoid the possible problem you may face while applying for the loan.

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