How to Raise CIBIL Score?

Lending institutions like Hero FinCorp use your CIBIL score to determine your loan eligibility. While a decent score makes a loan easier to obtain, a poor score hinders your loan access. A good CIBIL score also attracts lower interest rates with extra benefits. If you have a bad credit score but need a loan, here are some tips to raise your CIBIL score before applying:

1. Set Standing Instructions for Automatic Repayments on Time

Repayment history significantly affects your CIBIL score. Be aware of your due dates and pay off all loan EMIs promptly. If you often forget to pay your dues, set standing instructions with your lender to pay them on time automatically. Once you do that, the repayment will be automatically done on the specific due date.

2. Clear all Credit Cards Dues on Time

Use your Credit Card wisely. Plan your finances to clear your bills by the due date. Non-payments hit your CIBIL score significantly. Moreover, it appears in the DPD (Days Past Due) section of your credit report. 

If completing the payment is not feasible, at least pay the minimum due amount to avoid non-payment. Although it will incur interest in the next billing cycle, it prevents your CIBIL score from falling.

Also Read: How to Increase Cibil Score from 500 to 750

3. Identify Errors in Your Credit Report

Having errors in the credit report is a common phenomenon. They may include wrong personal information, incorrect account details, duplicate accounts, mismatched paid-off or overdue amounts, false DPD, etc. You must also check your credit report for fraud or suspicious activities. Raise an online grievance with CIBIL to resolve these errors. Once the bureau rectifies the mistake, your CIBIL score will increase instantly.

4. Seek Credit Sparingly 

While soft inquiries do not impact your credit score, hard inquiries pull it down by a few points. Multiple credit inquiries within a short period may take a significant toll on your credit score. Therefore, seek credit sparingly without numerous hard inquiries. 

5. Obtain a Personal Loan  

A Personal Loan is an excellent medium to boost your credit score. Borrow a small loan and pay its EMIs on time to build the score over time. The loan provider may charge a higher interest rate if you have a low credit rating. However, repaying this loan on time will improve your credit score. Moreover, it will attract lower rates in the future. 

Also Read: How to Increase Credit Score to 800?

6. Retain Old Credit Cards 

Lending institutions trust applicants with a longer history of credit usage. If you have an old credit card, avoid closing it even if you do not use it anymore. Its age will lengthen your credit history. Moreover, its credit limit will keep a low Credit Utilisation Ratio (CUR).

7. Monitor Your Joint Loan Accounts

If you have signed a loan as a co-applicant or guarantor, you must monitor those accounts to ensure timely repayment. Your credit score might be low because the primary borrower missed timely payments. Discuss the situation with them and help them clear the dues to save your CIBIL score.

Also Read: 7 Tips to Increase CIBIL Score Quickly

8. Increase Your Credit Limit

If you use credit responsibly, your credit card provider may offer you an increase in the credit limit. A higher credit limit allows you to use more credit without increasing your CUR, if you manage to control your spending proportionately.

9. Maintain a Healthy Credit Mix

Build your credit portfolio with a healthy mix of loans and credit cards. Diversify it with Personal Loans, car loans, home loans, credit cards, etc. Consumers with a diverse mix of credit accounts are more credible and build a higher CIBIL score.

Also Read: How to Increase CIBIL Score from 600 to 750

Following the above tips will improve your CIBIL score over time. Since it might take a few months, being disciplined, patient, and smart with credit is essential. Once you improve your credit score, you may find it easier to get a personal loan and qualify for better rates and conditions.

Disclaimer: The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader's discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.