How to Improve Your CIBIL Score for Better Credit Card Options?

If you are thinking of getting a credit card, the card provider you are planning to get the credit card from may look at your CIBIL score before they decide whether to approve your credit card application. 

CIBIL score for credit card is a three digit number that ranges between 300 and 900 and quantifies your financial behaviour. If your CIBIL score exceeds 750, you can get the best loan deals if you meet other requirements. 

However, if your score is less than 650, the loan you are offered might have a higher interest rate. Sometimes, having a low credit score could even mean your loan application is turned down! Wondering how to improve your CIBIL score?

This article will discuss six smart ways to help you do that. Additionally, if you’re looking to take control of your finances, don’t forget to compare credit cards to find the best options for your needs.”

Six smart ways to Improve Your CIBIL Score are:

  1. Make Sure You Repay on Time 

Failing to make your loan or credit card repayments on time can negatively impact your CIBIL score. It’s important to stay vigilant and punctual when repaying your loan instalments and credit card bills. 

If you miss or delay these payments, you not only pay extra charges but also experience a significant drop in your credit score. To avoid any payment delays, set up reminders to ensure you repay on time. Also, consider setting up standing instructions or orders in your bank account, which will automatically deduct a predetermined amount at regular intervals.

  1. Review Your CIBIL Report for Mistakes

Even if you’ve managed your credit well, hidden errors in your CIBIL report could drag down your CIBIL score for credit cards. These errors may involve incorrect personal information, inaccurate account details, discrepancies in overdue or settled amounts, duplicate accounts, and wrong days past due or collateral information. To address these issues, you can file a dispute resolution online through the official CIBIL website. 

  1. Aim for a Balanced Credit Mix

Striving for a well-balanced credit mix is a good strategy. It’s wise to have a mix of different types of secured and unsecured loans. Secured loans include auto and home loans, while unsecured loans encompass credit cards and personal loans. 

Lenders generally favour individuals with various secured loans because they are backed by collateral, making them less risky for the banks. If you have multiple unsecured loans, consider paying off some to establish a healthier equilibrium between secured and unsecured loans.

  1. Keep Your Credit Usage in Check

An effective way to boost your credit score involves not pushing your credit card to its maximum limit. A low Credit Utilisation Ratio (CUR) is recommended, ideally staying below 30%. For instance, if your monthly credit limit is Rs 1,00,000, aim to spend at most Rs 30,000 monthly. 

As long as your credit utilisation ratio remains around 30% or lower, your credit score is less likely to be affected. However, consistently maxing out your credit card or having a high CUR (ranging from 90% to 100%) can lead to a decline in your credit score.

Consider Getting a Secured Credit Card

Consider applying for a secured online credit card application from a reputable bank like Kotak Mahindra. These cards are backed by a Fixed Deposit (FD) that you provide, and if you pay off the balance by the due date, your CIBIL score is likely to improve.

Steer Clear of Co-signing or Guaranteeing Loans

It’s wise to refrain from becoming a co-applicant or guarantor for loans. When you share such a responsibility, any missed or delayed payments by the other party can negatively impact your CIBIL score. Suppose the borrower fails to meet their loan repayment obligations or experiences delays in repaying their loan instalments. In that case, it can significantly decrease the CIBIL score for both the borrower and the co-applicant or guarantor.

Read: How to Navigate and Negotiate Credit Card Interest Rates

Conclusion

Now that you are familiar with ways to improve your CIBIL score, it’s important to consistently maintain a high credit score to ensure fast loan approvals. Stay vigilant about your CIBIL score, and address any issues promptly when your score decreases. 

Use tools like the CIBIL score calculator to assess your score before applying for an online credit card application. This proactive approach will help you stay on top of your credit health and take the necessary actions to keep your credit score in good shape.

Read: Exploring the Contrasts between Credit and Debit Cards
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Divya Kumari
Divya Kumari
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