A credit score plays an important role in determining an individual’s access to financial products. It serves as a reflection of one’s creditworthiness, based on past borrowing and repayment patterns. A high score indicates responsible credit behaviour and increases the chances of securing loans at favourable terms. Conversely, a low score can limit access to credit or result in higher interest rates.
A CIBIL score is one of the most widely recognised indicators of financial credibility in India. It helps lenders evaluate the likelihood of timely repayment before sanctioning credit. Understanding how to improve your CIBIL score and monitor it regularly can help you maintain a healthy credit profile and strengthen your eligibility for future loans.
What is a CIBIL Score and why does it matter?
Your CIBIL Score, assigned by TransUnion CIBIL, is a three-digit number that typically ranges between 300 and 900. The closer you are to 900, the stronger your credit profile appears. This score is built from your repayment history, existing credit usage, and how consistently you’ve managed your debts over time.
A strong score (think 750 and above) indicates responsible credit management. This can help you secure better terms and a lower interest rate.
How to check your current CIBIL Score?
Checking your score is simple. It is advisable to check your CIBIL score regularly, not just before applying for a loan. Here’s how you can do it:
1. Visit the official CIBIL website or your preferred lender’s website.
2. Provide personal details such as your name, date of birth, PAN, and contact information.
3. Complete authentication (often through an OTP).
4. View your current CIBIL score and download the detailed report.
Factors that influence your CIBIL Score
Several factors determine how your score is calculated. While you don’t need to know every detail, understanding the key components helps you manage your credit better:
1. Payment History – Your repayment record holds the most weight. Timely payments on EMIs and credit card bills help maintain a strong score, while missed EMIs can have a negative impact.
2. Credit Utilisation Ratio – This refers to how much of your total credit limit you are using. Try to keep utilisation below 30% (so if your limit is Rs.1 Lakh, keep usage under Rs.30,000).
3. Length of Credit History – The longer you’ve held credit accounts (and managed them well), the better.
4. Credit Mix – Having a balance of secured loans (like a home loan) and unsecured loans (like credit cards or personal loans) demonstrates that you can handle different credit types efficiently.
5. Credit Enquiries – Each time you apply for a new loan or card, the lender performs a ‘hard enquiry.’ Multiple enquiries in a short span can lower your score. Apply selectively and only when necessary.
Practical ways to improve your CIBIL Score
Improving your score isn’t complicated. It’s about developing consistent, disciplined financial habits. Let’s look at some simple but effective ways to improve your CIBIL score over time:
● Pay all EMIs and credit card bills on time to avoid a negative impact on your credit history.
● Keep credit card utilisation below 30% of the total limit to reflect responsible usage.
● Avoid submitting multiple loan or credit card applications within short intervals.
● Retain older credit accounts to strengthen your overall credit history.
● Maintain a balanced mix of secured and unsecured credit to demonstrate repayment stability.
A strong CIBIL Score isn’t built overnight. It’s the result of consistent habits, careful monitoring, and smart financial choices. With consistency, you can build a good credit score that can help you unlock better loan offers and a lower interest rate.