CIBIL score is becoming very vital in recent times to get approved for anything and everything right from a credit card to Housing loan, card loan, etc. That being said, its very important to keep your scores high so you can be sure about getting approved for loans in future without any surprise.
As you might know, a CIBIL score of 750 and above increases your probability for getting approved for a loan or credit card. Here i am sharing my experience in attaining 800 and above score which is considered excellent by the lenders.
Here are 7 Effective Ways to Improve CIBIL score
1. Get Secured Credit Cards:
Secured credit cards are the ones issued against FD and its a surefire way to improve your CIBIL mainly because they don’t pull a hard inquiry on your CIBIL account. If you use your secured credit cards properly, you can expect a good rise in score within a year.
My Experience: I had been using ICICI platinum credit card for about 4 yrs and Axis bank insta easy credit card for around 3 yrs both of which contributed a lot to my credit score as i had always paid my bills on time without a single default. Both of them were secured credit cards.
2. Take an Housing Loan
While credit cards and personal loans are considered as a “bad credit”, Housing loan is considered as a “good credit” and if you have an active housing loan on your name or as a joint holder, it contributes well to your CIBIL score positively.
My Experience: It took about 1 Yr or so of taking housing loan for my score to go above 800, before which my score was somewhere around 750
3. Educational loan Helps too:
Educational loan is also considered as a good credit. If educational loan doesn’t apply to you, other loans like Car/bike loans and Installment loans are also considered as “good”.
My Experience: My educational loan was active for about 5 years and i closed it recently and i’m sure it should have contributed very much to the score.
Above 3 were the only active loans on my CIBIL records with which i was able to get 800+ CIBIL score (by around 2014 mid). Infact, my Education loan EMI’s were paid with a 3 months delay most of the time which was marked as “STD” on my CIBIL report which means “Payments being made after 90 days” and it doesn’t seem to affect my score at all.
My major credit/loan activities started by around 2009.
Here are few more ways to help you improve your CIBIL score:
4. Credit Card loans like HDFC Insta Jumbo Loan:
HDFC Insta Jumbo Loan is nothing but a credit card loan given on HDFC credit card without reducing your credit limit. Its more like a personal loan, however, its reported to CIBIL as a “credit card” which is a good thing and moreover, you don’t get any hard inquiry on your a/c when you avail this Jumbo loan.
- More in detail: Insights into Insta Jumbo Loan on HDFC Bank Credit Card
Am unsure how other banks deal with credit card loans, however, if you’re given a credit line without affecting your credit limit it has to work more or less in a similar way.
5. Increase the Age of your credit history:
You’ll lend 10 Lakhs to your childhood friend than to someone whom you know a yr back. Right? That’s because of the trust. It applies to Credit history too. Your oldest loan, preferably credit card can help to improve your CIBIL score.
Make sure you never close one of your oldest credit card accounts. It not only adds weight to your score, its also a good sign for new lenders to see how loyal you are and how good you can repay for a long time.
6. Stay within 30% Credit Limit:
Make sure your expenses are within 30% of your credit Limit. It means the outstanding amount on your card shouldn’t exceed this number. If you spend more, you can always pay in advance to your card a/c to make sure you’re not using much of your limit.
Its however good to go near the credit limit, maybe once, so your bank knows that you need more limit.
7. Keep your Credit Cards Active:
After looking into my friend’s latest CIBIL report, i came to know that his ICICI credit card usage is not being reported to the CIBIL and it was blank in respective months when there were no usage/outstanding on the card.
- The credit score is all about how you payback the credit you owe.
If you never take the credit, how does CIBIL can rate your credit handling capacity? So, its always good to charge a minimum amount like Rs.500 or so on you card and payback full before due date, so your credit card is reported active to CIBIL and other Credit Bureaus like Experian.
To sum up, improving your CIBIL score takes time. you cannot increase your CIBIL score instantly overnight, which is the sad part of the system. It took me over 6 years to cross the 800 mark with very low activity. Maybe if you have higher activities with mix of Good/bad credit, you can climb the ladder faster.
What’s your CIBIL score and what do you think helped to get you there? Share your views in comment below.