How to Improve Credit Score/CIBIL score?

What is a Credit Rating?

A credit rating is a numerical depiction of your creditworthiness, typically ranging between 300 and 900. It is calculated on the basis of your credit history, including your repayment behaviour, credit utilization, and the types of credit you’ve availed. The higher your score, the better your chances of being approved for loans and credit cards, often at more favourable interest rates.

What is a CIBIL Score?

In India, the CIBIL (Credit Information Bureau (India) Limited) score is one of the most recognized credit scores. Like other credit scores, it ranges between 300 and 900, with 900 being the best possible score. This score is generated by the TransUnion CIBIL, a credit bureau that collects and maintains credit information of individuals and companies. Your CIBIL score is a key factor that lenders consider when you apply for a credit card or loan.

Is Credit Rating and CIBIL Score the Same Thing?

While the terms “credit score” and “CIBIL score” are often used interchangeably, they aren’t exactly the same. A CIBIL score is a type of credit score, specifically the one generated by TransUnion CIBIL. However, other credit bureaus like Experian and Equifax also provide credit scores. “Credit rating,” on the other hand, is a broader term that can refer to an assessment of a borrower’s creditworthiness by any credit rating agency.

How Can I Improve My CIBIL Score

Improving your CIBIL score is not something that you can achieve overnight, but consistent efforts and following these guidelines can yield positive results. Here are some strategies:

• Making timely payments: Late payments can adversely affect your credit score and make it difficult to get approvals for loan or credit in the future. You can manage payment on time by setting automatic payments or reminders to ensure pay all dues before the due date.
• Keep an eye on your credit report: Checking and monitoring your credit report regularly can ensure that all the information is updated and accurate. Also, if you verify your own credit score from verified websites, it does not impact it.
• Apply for credit judiciously: Applying for excessive credit in a short span of duration can negatively affect your credit rating. You should apply for credit only when you need it. Make sure to research your options before endlessly applying.
• Keep Balances in Check: Maxing out your credit cards or high outstanding balances can hurt your credit score and make it difficult to get approved for credit in the future. Make it a habit to pay off your credit card balance in full each month. Also, it helps to limit your credit utilization. Ideally, it is recommended to use less than 30% of your credit limit. High utilization of credit can indicate credit dependency and lower your overall CIBIL score.
• Use Your Credit Card Wisely: Credit cards like the Adani One ICICI Credit Card, ICICI Platinum Credit Card or ICICI Signature Credit Card offer great rewards. However, ensure you use them responsibly to avoid falling into debt.
• Diversify Credit Types: A mix of secured (like a vehicle loan, home loan, other credit cards) and unsecured credit (like credit cards) can positively impact your score.

Does Taking a Loan Help Improve Your CIBIL Score?

Yes, responsibly managing a loan can improve your CIBIL score. When you consistently make on-time payments on your loans, it demonstrates your reliability as a borrower. However, it’s important to borrow within your means to avoid the risk of defaulting, which could harm your score.

Will My Credit Score Get Impacted if I Don’t Use My Credit Card?

Surprisingly, yes. If you don’t use your credit card, it could impact your score negatively. Credit bureaus assess your credit behaviour based on your activity. For instance, you may be a travel enthusiast and own the best travel credit card, but no usage might be interpreted as inactivity, which doesn’t help your score. It’s advisable to use your credit card regularly, even if it’s for small amounts, and ensure timely repayments.

You can steadily and eventually improve and maintain a good credit score or CIBIL score by following these simple guidelines. Whether they are best credit cards for travel, rewards, cashback, loans, etc. remembering these points will ensure you are in a strong position to avail the best financial products and services, whenever you need them.

 

Also Read - 

 

The Ultimate Guide to the Best Travel Credit Cards

Platinum vs Signature: Which Adani One ICICI Credit Card is best suited for you!

Adani One ICICI Bank Credit Card 10 Benefits, Features, Fees, How to Apply and more

Best Card for Movie Tickets and Travel Deals

Why Adani One ICICI Credit Card is Best Card in India

Adani One ICICI Credit Card Eligibility, Documents Required