There are many ways on how to increase CIBIL score from 600 to 750 – and we’ll get to those shortly – but nothing will boost your credit score faster or more efficiently than paying bills on time and utilizing credit cards wisely.
First let’s quickly know about CIBIL score or credit score.
What is CIBIL or credit score?
A CIBIL or credit score is a numerical expression that represents an individual’s creditworthiness based on a level examination of their credit files. A credit score is largely determined by a credit report, which is normally obtained from credit agencies.
Credit scores are used by lenders, such as banks and credit card firms, to assess the risk of lending money to consumers and to reduce losses due to bad debt.
Credit scores are used by lenders to evaluate who qualifies for a loan, at what interest rate, and with what credit limitations. Credit scores are also used by lenders to assess which clients are likely to generate the greatest income.
Banks are not the only ones who use credit scoring. The same tactics are used by cell phone providers, insurance companies, landlords, and government authorities. Alternative data sources are being used by digital finance firms, such as online lenders, to determine borrowers’ creditworthiness.
A good CIBIL score improves your chances of receiving a loan or credit card, but a low score entirely negates your prospects.
Banks are hesitant to lend or issue credit cards to persons with low credit scores because they do not trust them with their money.
Even if you have a poor credit score, if you acquire a card or loan, your credit limit may be limited or you may have to pay a very high interest rate. You must raise your credit score to avoid this.
What is considered a good CIBIL Score?
The Reserve Bank of India has licensed four credit information firms in India. Since January 2001, the Credit Information Bureau (India) Limited (CIBIL) has operated as a Credit Information Company. Following that, the Reserve Bank of India granted licenses to Experian, Equifax, and CRIF High Mark to operate as Credit Information Companies in India in 2010. Transunion purchased CIBIL.
Although all four credit information firms have established their own credit ratings, the CIBIL credit score is the most widely used. The CIBIL credit score is a three-digit number that gives a summary of a person’s credit history and rating. This score varies from 300 and 900, with 900 being the highest.
Individuals with no credit history will be assigned a score of 1. If you have less than six months of credit history, your score will be 0. It takes time to build up a CIBIL credit score, and it generally takes between 18 and 36 months or more of credit utilization to achieve a good credit score.
9 Tips How to increase CIBIL score from 600 to 750
There are several methods you may use to enhance your credit score. Here are 9 pro tips how to increase CIBIL score from 600 to 750.
1. Review Your Credit Reports
The first thing in improving your CIBIL score is to review your credit Report
Each of the four credit reporting agencies is required to provide you with one free credit report per year, and requesting one has no effect on your credit score. Examine each report thoroughly. Dispute any mistakes you discover. This is the closest thing to a quick credit repair you can get.
According to a government survey, 26% of customers had at least one potentially significant mistake. Some are basic errors, such as a misspelt name, location, or accounts belonging to another person with the same name.
Accounts that are wrongly reported late or overdue; debts listed twice; terminated accounts that are shown as being active; and accounts with an inaccurate balance or credit limit are all more expensive.
Because the credit score is generated based on the information in the credit report, it is critical that you verify that this report is error-free.
2. Lower your credit card utilization
Lowering your credit usage rate may be an excellent strategy to improve your credit score.
You’ve probably heard that you should maintain your credit card use around 30%. Here’s why it’s essential and how you can help.
One of the most crucial variables in calculating your credit scores is your credit usage, which is the proportion of your credit limit that you are utilizing.
Because a high use rate may suggest that you may struggle to pay your payments on time, a lower utilization rate is typically preferable for your credit ratings.
You can modify your balance or available credit in a variety of ways. This can assist you in enhancing your credit usage rate and, your credit as a result.
Credit card utilization rates (also known as credit utilization ratios) are easy to compute. First, check your credit card account for the credit limit. Then, divide your monthly bill balance by your credit limit to get your credit usage rate.
So, if you have a Rs 1,00,000 credit limit and spend Rs 20,000 during your billing month, your credit usage rate is 20%.
If you have multiple credit cards, add up the balances and divide the total by the total credit limits to calculate your overall credit usage rate.
Also, read: Bajaj Card kaise banaye in Hindi 2021
3. Clear your outstanding Bills
If you have any outstanding credit card bills or loans, you must pay them off right away in order to restore or raise your credit score slightly.
Payment history is one of the variables considered while establishing one’s credit score. If you have a history of late payments, your credit score will suffer, and vice versa.
It is a good idea to set up payment reminders or auto debit to guarantee that you always pay your credit card bills or EMIs on time.
Also, avoid paying simply the minimum amount due on your credit card because this may raise your card’s outstanding debt. To keep the outstanding balance low, try to pay the entire bill.
4. Avoiding Closure of Older Accounts from report
To improve credit score, some people delete their old accounts, inactive accounts, or accounts with poor history.
Some people even try to have past debts removed from their credit reports after they have been paid. This may not be the best way to proceed.
The age of credit component of your credit score considers how long you’ve held credit accounts. The higher your average credit age, the more appealing you look to lenders.
If you have old credit accounts that you are no longer utilizing, do not shut them.
Though the credit history for those accounts will stay on your credit report, canceling credit cards while carrying a debt on others will reduce your available credit and increase your credit usage ratio. This might result in a few points deducted from your total.
Although it is true that negative items are harmful for your credit score, they are automatically erased off your credit report after a certain amount of time.
Having old accounts deleted can have a significant negative impact on your credit score, even if they have a solid paying history.
Furthermore, if you have paid your debts, you should keep them on your record since they will increase your credit score and indicate your reliability.
5. Plan your credit on time
Many persons with low scores are those who do not arrange their finances effectively.
Your credit card and EMI payments have the most impact on your credit score, and each late or missing payment can have a negative impact. The implications of failing to fix yourself in a timely manner might be serious.
If you apply for too many credit cards in order to boost your credit limit, but are unable to pay off all of them on time, you will be left with a large outstanding debt and a history of late payments, which will significantly lower your credit score.
In addition, requesting for unexpected loans might put you in a poor financial situation if you are unable to return them.
As a result, it is essential to plan credit and apply for a credit card/loan only when absolutely necessary and when you are confident that you will be able to return the amount borrowed.
If you are in a financial crisis and have a lot of debt, you may always get a credit card takeover loan to pay it off. You may apply for the loan from the comfort of your own home, and repayment is simple and flexible.
Credit scores cannot be restored in a matter of days or weeks. It takes time, patience, and forethought.
When your credit score rises, try not to make any mistakes that may jeopardize it. If you don’t have any credit, try to develop one by applying for a normal or secured credit card.
Also, read: How To Reduce Credit Card Debt: The Top 9 Tips
6. Avoid multiple Credits
Nothing prevents you from applying for two or more credit cards in a short period of time, or even at the same time. However, numerous credit card queries might harm your credit score and create a red signal for prospective creditors.
If you keep applying for multiple loans and Credit cards, then you should stop it immediately. You should avoid applying for multiple loans, credit cards, and other debt instruments at the same time since it paints an image of someone who is highly reliant on credit. This behavior is instantly monitored by credit bureaus, resulting in a drop in credit score.
It’s usual to receive estimates from various lenders when shopping for a mortgage, vehicle loan, or even a private student loan to verify you’re getting the best conditions. And if you do this within a short amount of time—typically 14 to 45 days, depending on the credit scoring model—all hard inquiries that appear on your credit reports will be counted as one for computing your credit score.
However, you will not receive the same bonus if you use a credit card. In most circumstances, each credit card account application will result in a new inquiry, which will be factored into your credit score.
The credit scoring model determines how those queries influence your credit ratings.
7. Do a Quick Loan Shopping
If you have poor credit and are unable to repair your score through conventional means, you may want to consider obtaining a “quick loan”.
These are generally small-amount loans ranging from Rs 10k to Rs 1,00k, which have their payback history recorded to credit agencies and might appear as a positive on your credit report. This is only used as a last resort.
8. Pay Off Your Card Balance via Personal Loan
While taking out a personal loan initiates a hard credit check and therefore lowers your credit score, a personal loan can have a beneficial influence on your credit score in a variety of ways.
Taking out a personal loan improves your credit mix, which accounts for 10% of your overall score. It demonstrates to creditors and lenders that you are responsible with money by carrying a variety of credit and debt.
Paying down your debt will help reduce your credit usage. Your credit utilization is the ratio of how much credit you use to how much credit you have available to you.
9. Consider Consolidating Your Debts
If you have a lot of bills, it could be a good idea to get a debt consolidation loan from a bank or credit union and pay them all off at once.
Then you’ll just have one payment to make, and if you can secure a lower interest rate on the loan, you’ll be able to pay off your debt faster.
This can help your credit usage ratio and, as a result, your credit score.
Consolidating several credit card accounts by paying them off using a balance transfer credit card is a similar strategy.
These cards frequently offer a promotional period during which they charge 0% interest on your balance. Balance transfer fees, on the other hand, might cost you 3–5% of the amount transferred.
The Bottom Line
Improving your CIBIL score is an excellent goal to have, especially if you want to apply for a loan to make a large purchase, such as a new vehicle or home, or if you want to qualify for one of the finest rewards cards available. When you begin taking efforts to improve your CIBIL score, it may take several weeks, sometimes several months, to see a substantial improvement.
Frequently Asked Questions FAQ’s
Normally, banks will enable you to pay just 10% of your overall credit card balance. Your CIBIL Score may not be impacted if you pay this amount.
Credit card balances may even harm your credit score, and the effect is most pronounced when amounts surpass 30 percent of a card’s borrowing limit. Those with the best credit prefer to maintain their credit use below 10%.
Yes, you can apply for two or more credit cards in a short period of time, or even at the same time. However, numerous credit card queries might harm your credit score and create a red signal for prospective creditors.
Obtaining a perfect 900 credit score would need significant financial discipline, as well as time and patience.
A credit score of 750 or more is considered acceptable and opens the door to loan and credit card offers. To get a score of 800 or above, you may need to complete the procedures outlined below.
1. Make on-time payments on your credit card bills and EMIs. Even skipping a single payment might have a negative impact on your credit score. Furthermore, pay your credit card account in full.
2. Maintain a low credit card utilization percentage and never exceed your credit limit.
3. Having many credit cards and consistently repaying them will help you improve your credit score.
4. The length of your credit history is an essential factor in determining your credit score. The longer your credit history, the higher your credit score.
1. Refuse to accept any bad information on your credit report.
2. Submit a dispute for all excessive hard inquiries on your credit report.
3. Reduce your revolving balances (0 is best, 30 percent is decent)
4. You must pay your bills on promptly.
5. Request that your family add you as an authorized user to their credit cards.