CIBIL score is a three-digit number that ranges from 300 to 900 and is considered good when it is close to 900. Similarly, it is bad when it is close to 300 and decreases your chances of getting approval for a loan or a credit card. This three-digit number represents your creditworthiness. It is checked by banks and financial institutions whenever you apply for a loan or a credit card. It is advisable to check your CIBIL score regularly to avoid any discrepancies.
CIBIL score is generated by a credit rating agency by the name of TransUnion CIBIL. TransUnion CIBIL is the number one credit score rating agency and the only rating agency that counts while seeking finance. You can check CIBIL score free online and track your credit report to avoid any discrepancies.
Importance Of CIBIL Score
CIBIL score plays an important role in determining the fate of your loan or credit card application. Having a low CIBIL score can land you in trouble at the same time. However, there are numerous benefits that come along with a high CIBIL score. From having low-interest rates to quick loan approvals. You can take advantage of multiple benefits by having a high credit score.
CIBIL is an important aspect of getting credit as banks and financial institutions check your CIBIL score as soon as they receive your loan or credit card applications. Having a CIBIL score of more than 750 is considered good for loan or credit card approvals. You can keep an eye on your credit history and take the necessary steps to improve your CIBIL score.
5 Ways To Build Up Your CIBIL Score
Taking care of your repayment habits can help in improving your credit health and therefore, your CIBIL score. Having a good CIBIL score can make the loan approval process hassle-free and also comes with numerous benefits. Moreover, having a low CIBIL score does not mean that you would not get loan approvals. Since you can always build up your CIBIL score before applying for any loan or credit card.
However, it is important to understand that your CIBIL score cannot improve overnight and it takes time to build a credit history in order to have a high CIBIL score. It requires a lot of time and patience to build a high CIBIL score. On the bright side, you can improve your CIBIL score irrespective of how low it is. But, the lower your score is, the more time it will take to build up your CIBIL score.
Here are a few steps that you can consider to improve your CIBIL score:
Making On-Time Repayments
Having a credit card and exhausting your credit limit is a common practice in today’s time. Credit cards can offer you the convenience to buy anything from anywhere at any time. With such injudicious spending's, your bills will rise beyond your ability to repay the credit card bill. These can result in delays in making credit card repayments which can result in having a lower CIBIL score.
Not only is it a major factor in having a low CIBIL score, but it also adds up to a hefty amount of late payment charges to your credit card bill. Having a high bill amount to repay within a specific time can be challenging. Therefore, it is advisable to only spend using your credit card within your repaying capacity. You can change your buying patterns and can control your expenses to stay within the repaying capacity.
It is advisable to not use your credit card for a period of 3-4 months, if possible to avoid hefty credit card bills and create savings to repay your bills. Maintaining this healthy repaying practice can help you to improve your CIBIL score.
Pay Your Dues Completely
Credit card companies offer to pay the minimum dues at the time of bill generation. Minimum dues are calculated at 5% of the outstanding balance in a particular billing cycle. Paying the minimum dues can save you from late payment charges but the interest will be added to your next bill. Also, not paying your credit card bill in full and only paying the minimum amount for longer periods can also have a negative impact on your CIBIL score. As a result, your CIBIL score might take a hit.
Therefore, it is important to understand that paying your credit card dues completely can help you in maintaining healthy credit health and thus, a high CIBIL score. Also, you’ll be able to avoid the interest and taxes that are being added to your next credit card billing cycle. Paying credit card dues in full can steadily improve your score and reflect a higher number when you next conduct a free CIBIL score check.
Never Exhaust Your Credit Limit
Maximising your credit card usage can make you look credit hungry to the credit bureau and can lower your CIBIL score. Maintaining a healthy credit utilisation ratio can help in having a healthy credit lifecycle. The credit utilisation ratio refers to the amount that is being used on your credit card with respect to the limit of your credit card.
Having a high credit utilization ratio can lower your CIBIL score and vice versa. GroMo advises you to keep your credit utilisation ratio below 50% of your entire credit card limit to boost your CIBIL score.
Do Not Withdraw Cash On Your Credit Card
Using your credit card in an ATM to withdraw cash can be the worst decision that you make if you are trying to build up your CIBIL score. Credit card companies offer cash advance limits to lure you into their credit traps. However, withdrawing cash from an ATM using your credit card can attract a huge amount of interest. You will have to repay this interest in your monthly billing cycle. Also, the interest will start from the day you withdraw cash using your credit card.
Unlike retail purchases, where the cardholder receives a 20-25 days interest-free window to repay the amount spent. Withdrawing cash on your credit card can increase your credit card bill and can result in a huge fall in your CIBIL score. Therefore, it is advisable to never withdraw cash on your credit card if you are trying to build up your CIBIL score.
Avoid Frequent Enquiries & Check Your Credit Report
You can conduct a CIBIL score free search online to get your score and report. However, there are chances that your CIBIL score might take a hit if you enquire about your CIBIL score too often. Enquiring about your credit score very often will make you look credit hungry and would look like you are trying to desperately apply for a loan.
Also, there are chances that your CIBIL score can be low because of any discrepancies or errors in your credit report. Therefore, it is important to carry out a CIBIL score check online. Also to keep an eye on your credit report to avoid any such errors that can lower your CIBIL score.
These are some of the proven ways that can help you in building up your CIBIL score. Moreover, having a high CIBIL score can bring a lot of advantages and can make it hassle-free to apply for a loan or credit card. Also, you can check the official GroMo website to learn about how to check CIBIL score and more such financial facts.
To gain more knowledge about CIBIL score login or to know how to carry out a CIBIL score check free online by PAN Number, you can check out the GroMo Academy. GroMo is one of the leading mobile apps in the country. You can download and sell financial products to potential customers to earn money using this app. Just download the GroMo app and become a GroMo Partner to start earning today.
How do you Increase CIBIL score very fast?
Paying your dues on time and maintaining healthy credit habits can help you in improving your CIBIL score. However, it is important to understand that improving your CIBIL score is not an overnight process and takes time and patience to gradually build up your CIBIL score.
Is a 750 CIBIL score good?
A CIBIL score of 750 and above is considered good and can increase your chances of getting loan approvals instantly. However, you can still improve your CIBIL score and avail of multiple benefits.
How to improve CIBIL score without Credit Card?
Avoid defaulting on any new loans and make timely repayments for your existing ones. Also, avoid closing your old bank accounts to improve your CIBIL score without a credit card.
How to improve CIBIL score after loan settlement?
Convert your account status from settled to closed and clear any outstanding dues. Also, get a secured credit card and keep the credit utilisation ratio under 50%. Pay your card dues on time to improve your CIBIL score after loan settlement.
Is 550 a good CIBIL score?
A CIBIL score of 550 is usually considered low and insufficient to be eligible for personal loans in most banks and financial institutions. You can take the necessary steps and improve your CIBIL score over time to apply for loans and get approvals.