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How to Improve CIBIL Score Fast?

Updated on: 05 Apr 2022 // 21 min read // Personal Loans
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CIBIL score is a lifeline of your financial health. Whether you urgently need to swell up credit limit, or need a planned Personal Loan Online, Education Loan or any other credit line to meet the cash lapses, you must have a robust credit report without any red flags.

Irregular EMI and credit card repayments, default, excessive credit limit usage, too many loans or credit queries are marked as red flags in your credit information report and hurt your score. With the poor score, your loan application is either rejected or quoted with a high interest rate. So you must always secure a good credit score to stay credit ready.

Additional Reading: How to check cibil defaulters list?

However many of us are completely naive about the importance of a credit score until the loan application is rejected. However, the loss is reparable if you are determined for the same. Maintaining a good credit score is not rocket science. All it requires is financial discipline to keep your score soaring.

Let’s find out below how to improve CIBIL Score Fast. To further simplify the process of credit improvement, we have divided this guide into two sections:

A) Consumers with red marks in their Credit Report, and B) Consumers with new credit history.

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Case A:

When you have red flags in your credit report, and you urgently need to improve your CIBIL score to improve creditworthiness.

Herein, the priority is to improve the credit history. You cannot remove any past record in your credit report as CIBIL doesn’t allow that. All you can do is to build a good history from now onwards. Let’s find step-by-step below how to improve the credit score fast.

1. Pull out your report and assess the cause of poor score. Some of the common reasons are:

  • Misreport/ Error in report
  • Unidentified transactions/ Identity theft
  • Accumulated debt
  • Irregular repayments
  • Default
  • High credit utilisation ratio
  • Too many unsecured loans/credit cards
  • Too many credit queries

Circle the reasons that have hurt your score and use the approach accordingly.

2. Whether it is a misreport by the lender or an unidentified transaction, you must raise the dispute at the earliest. As the error is corrected, your credit score would jump back to its original position. In case of Credit Card Identity theft, you must block the card as soon as you find out the issue and report the Credit Card provider about the same.

3. If your irregular repayments are a result of accumulate debt, you must think of the ways to ease the debt burden for the long run prospective. For example: You must either consider closing/settling small loans or consolidate various loans and credit card bills into one and reduce monthly outgo. As you begin to repay regularly, you will build a good history. Reducing debt burden will also significantly improve your score.

4. A lot of people use credit cards irresponsibly and hurt their score. Credit cards indeed could be your perfect mate for improving the score. Here are some of the things to keep in mind while using credit cards:

  • Clear old credit card balance.

Stop rolling over credit card payments from one month to another. Paying out minimum due and keeping balance also hurt your score.

Credit card interest rates can be higher than Personal Loan rates, and thus you must be diligently regular in your repayments.

If you have excessive credit usage every month, your score is low despite making regular payments. Herein, what you need is an enhanced credit limit. Apply for another card and reduce your credit usage ratio.

In complete contrast, having too many cards also hurts your score. Make sure you do not have too many idle cards consuming your funds for annual charges and other fees. Close such cards but make sure you keep the limit as per your monthly expenses.

Do not close the oldest card with good credit history. The longer history cards are good for your credit history.

Strictly monitor your card expenses and use them according to your repayment capacity.

When you regular employ good financial habits, it will gradually improve your score.

Case B:

When you have a relatively new credit history, and you need to build your credit score to apply for a loan.

Herein, the key target is to build a good credit history. For, banks and NBFCs look at your past record of credit repayments as a certificate for regular payments in the future as well.

1. If you have a credit card, make sure you do not roll over the credit card balance. Repay before the due date every time.

2. As you need to create a good history, do use card limit up to 10-30 % every month and make regular repayments. This way you do not need a loan to build the credit history. Good credit card history also makes you eligible for loan gradually.

3. In case you do not have a credit card, apply for one. The bank you have a Savings Account with or have a Salary Account with will accept your Credit Card request. Use this card and be regular on the payments. Within six months you will build a good credit history.

4. If you have a running loan, automate the repayments. Have a standing instruction set for timely loan repayments. This way you need not remember the due date every month. But do ensure to maintain enough balance in your account every time for a positive transaction.

The steps discussed above are easy to apply and use. So follow them and gradually improve your credit score and become eligible for a lower rate of interest.

Also Read: 7 Steps to Improve Your Credit Score

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