5 best ways to build and improve your CIBIL Score

The importance of a good CIBIL score cannot be overstated in a time and age when credit has become more and more central to purchasing power. As per reports, both credit card spending and bank loans in India grew 13% and 60% respectively in FY22 as compared to a growth of 8% and a decline of 21% in the previous year, showing a surge post the pandemic.

Having a high CIBIL score is critical to getting your desired credit at competitive rates, whether it is to buy consumer durables, finance weddings or travel or bridge income gaps for other goals. The first step to building your CIBIL score is knowing where you stand currently and you can now check your CIBIL score by PAN card number online. The next step is planning your financial activities strategically. Read to know the 5 best tips to do so.

Know your CIBIL score and review your credit report regularly 

To build or boost your credit score, track your score at frequent intervals. Most importantly, read your credit report thoroughly. Your report contains vital data regarding your current debt obligations as well as unpaid EMIs, if any, and more. All this will help you understand the effect your behaviour with credit has on your score and help you correct any inaccurate information.

Sign up for a credit card or small loan

Creating a credit history is central to having a CIBIL score, and if you haven’t had any dealings with credit, get started now. You can opt for a personal loan of an amount you feel you can repay with ease or sign up for any credit cards that you are eligible for via your employer or existing bank account. Use your credit card judiciously to build your credit history and remember that it does take time to build and improve your score. In fact, you should plan to take on a variety of credit options, including secured loans, to boost your CIBIL score.

Ensure you repay credit on time, every time

This is the golden rule to increasing and maintaining your CIBIL score. Whether it is loan EMIs or credit card bills, make sure you meet the deadlines in a disciplined manner. Being timely with credit repayment not only improves your credit score, but also positions you as a reliable and trustworthy borrower. This makes it easier for you to get better loan and credit card deals in the future. If you are finding it difficult to repay on time, you can opt for a debt consolidation loan to club all your existing loans into one. You can also set up auto-pay options to avoid late payment of credit card bills and EMIs.

Decrease your reliance on credit

Another thumb rule to follow is to be careful about how much you rely on credit in your daily life. Swiping credit cards on luxury products or services without prior planning and having multiple loans to your name can affect your credit utilisation ratio, which is the amount of credit you are using versus the amount of credit you have access to. This is an important aspect when it comes to your CIBIL score, and experts suggest keeping it to 30% or less of your total credit limit. You can even make part-prepayments when you have surplus funds to decrease this ratio, become debt-free faster and boost your score. 

Use your credit cards wisely

Credit cards are a great way to increase your CIBIL score, but they require proper planning and monitoring. Firstly, ensure that you choose the ideal credit card based on your needs, the rewards offered and your eligibility. When you apply for a credit card that you are not eligible for, a hard enquiry of your credit score and subsequent denial of your application can decrease your score.

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Secondly, try to maintain your credit card account over time instead of changing cards frequently to build a longer credit history. Thirdly, do not just pay the minimum amount due on your credit card bills. Pay the entire amount due to improve your score. Lastly, opt for an increase in your credit limit after a while to decrease your credit utilisation ratio. Together, these moves will help you build and increase your score.

As you work on following these suggestions, get started with the first step today. You can check CIBIL score by PAN card number on various portals. A quick and easy way to do so for free is via Bajaj Finserv. Apart from your CIBIL score, you also get access to your personalised credit health report as well as competitive loan and credit offers here. So, get your CIBIL score now and begin to take the steps towards a financially healthy tomorrow.

(Disclaimer: Above mentioned article is a Consumer connect initiative. This article does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever.)