How to increase your CIBIL score or credit score?

Maintaining a strong credit score is crucial in today’s financial landscape as it can significantly impact your ability to access credit, secure favorable loan terms, and even influence employment opportunities. In India, the CIBIL score or credit score, ranging from 300 to 900, is a widely used metric that lenders rely on to assess an individual’s creditworthiness. If your CIBIL score is less than ideal, don’t worry – there are several proven strategies you can implement to improve it. Here are seven effective and best ways to boost your CIBIL score. 

1. Make Timely Payments

The single most important factor influencing your CIBIL score is your payment history. Ensure that you make all your bill payments, including credit card dues, loans, and utilities, on time. Set up automatic payments or reminders to avoid missed or late payments, which can significantly drag down your score.

2. Maintain Older Credit Accounts

The length of your credit history is another crucial factor in determining your CIBIL score. Keep your older credit cards active and in good standing, as this helps demonstrate your ability to manage credit responsibly over an extended period.

3. Optimize Credit Utilization Ratio

Your credit utilization ratio, which is the amount of credit you’re using compared to your total available credit, has a significant impact on your CIBIL score. Aim to keep your credit utilization below 30% by either increasing your credit limits or paying down your balances.

4. Diversify Your Credit Mix

Having a healthy mix of different types of credit, such as credit cards, personal loans, and mortgages, can positively impact your CIBIL score. This demonstrates your ability to manage various forms of credit responsibly.

5. Dispute Errors in Your Credit Report

Regularly review your credit report and be vigilant for any errors or inaccuracies. If you find any, initiate the dispute resolution process with CIBIL to have them corrected, as these can negatively impact your score.

6. Leverage Experian Boost

Experian Boost™ is a free service that allows you to include your utility and telecom payment history in your credit file, potentially increasing your FICO® Score. This can be a valuable tool for those with limited credit histories.

7. Avoid Excessive Credit Applications

Each credit application you make results in a hard inquiry on your credit report, which can temporarily lower your CIBIL score. Limit your credit applications to only what you truly need to avoid damaging your score.By implementing these strategies, you can steadily improve your CIBIL score over time and position yourself as a more attractive borrower in the eyes of lenders. Remember, building a strong credit profile is a long-term process, but the benefits can be significant in terms of accessing better credit terms and financial opportunities.