5 Ways To Secure Good CIBIL Score

What is a CIBIL Score?

A persons CIBIL score serves as a gauge of their financial well-being, indicating whether they are stable enough to be approved for credit.

What is a good score?

You are in good standing with the lender and are offered loans at a reduced interest rate if you have a high CIBIL score. In contrast, a low CIBIL score weakens your position in the eyes of the lender, and you may be offered a loan at a high interest rate or denied entirely. Heres how to maintain a high CIBIL score.

1. Pay installments timely

Make an effort to pay on time each month. Notify the lender in advance if you wont have the funds to make your scheduled payment. Your CIBIL score could be negatively impacted by simply one missed EMI, but they can still take your request into consideration.

2. Limit credit card spending

Your lender may occasionally provide you with a credit card with a large credit limit. However, you risk having your CIBIL score reduced if you use that cap to the fullest extent each billing cycle. It is generally accepted that a credit utilization ratio (CUR) of 30% is desirable.

3. Avoid multiple loans

If you take out a lot of loans, the lender may believe that you are overly reliant on them and that your account balance is insufficient. Having numerous loans lowers your CIBIL score as well. Rather than taking out multiple loans, you might take out one large loan and make your EMI payments on schedule. It will raise your score.

4. Do this post loan settlement

The term settled is recorded against your loan account when you settle a loan. It lowers your credit score because it demonstrates that you havent paid back the loan by the deadline. As a result, go to the lender and inform them that you would like to return whatever debt exemption you received. After that, the bank will fully cancel your loan and issue you a certificate of no interest.

5. Think before becoming loan guarantor

Prior to approving the documents to become a guarantor, keep in mind that your score will be impacted if the borrower defaults on the loan. In the event that the borrower defaults, you might also be required to repay the loan, which would lower your CIBIL score.