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How Can I Improve My CIBIL Score from 0-750?

Author: Rishi Agarwal
by Rishi Agarwal
Posted: Aug 01, 2018

What is a CIBIL Score?

A CIBIL Score is a 3-digit number assigned to individuals and businesses by TransUnion CIBIL (Credit Information Bureau India Ltd.), formerly named CIBIL. The score defines the prospects of lenders receiving the loan repayment from borrowers within the pre-determined date. Hence, your CIBIL Score is an assessment of your loan eligibility. Your creditworthiness is analysed basis parameters like credit history, frequency of loan applications, accuracy of repayment of dues on loans/Credit Card, number of ongoing loans, etc.

These parameters undergo complex statistical calculations to arrive at your score. You can check CIBIL Score in your CIBIL Report - Credit Information Report or CIR (for individuals) and Company Credit Report or CCR (for businesses). CIBIL is governed by Credit Information Companies (Regulation) Act, 2005, and authorised by the RBI or Reserve Bank of India.

Check CIBIL Score Implications

CIBIL Scores are evaluated on a scale between 300 and 900, where 900 is the highest and 300 is the lowest score. The minimum CIBIL Score needed for instant loan eligibility is usually 750.

Check CIBIL Score implications here:

750 – 900: A score within this range makes you eligible for quick and hassle-free loan approvals. Not only lenders will be eager to offer you a loan, you will also enjoy a position where you can negotiate and command a higher loan amount and lower rate of interest.

600 – 749: These middling scores reduce the scope of an easy loan approval, but does not do away with the chances altogether. Under such circumstances, lenders take into consideration other parameters like employment stability, monthly income, other existing loans, etc. to assess the credit health and payment behaviour of borrowers, decide on your loan eligibility basis the prospects of receiving loan repayments from them within the stipulated time.

300 – 599: A score below 600 greatly affects the chances of securing a loan. It reflects a borrower’s poor credit heath and indicates that the individual is perhaps spending beyond his/her means, increasing the chances of loans being rejected. In such cases, even if a lender agrees to process a loan approval, the borrower has to accept a comparatively low loan amount and a high rate of interest. Or else, a loan can be taken against collateral like gold loan, shares, assets and FDs. If you are unable to secure a loan, you have to improve your score before you apply for a loan again.

0 CIBIL Score: This implies that you are yet to begin your credit score because you don’t have a credit history. This can happen when you either don’t own a Credit Card or there are no transactions recorded against your Credit Card. Securing a loan with a 0 CIBIL Score can be challenging because a lack of credit history makes it difficult for lenders to analyse the prospects of receiving the loan repayment in time.

Steps to Improve Your CIBIL Score

If you are yet to have a credit history, here are the guidelines you should follow to take your CIBIL Score from 0 to 750:

Avoid transacting with a Credit Card with a low balance by paying off the dues at the earliest to prevent your score from falling further.

  • Make the entire monthly payment pending against your Credit Card within the due date as opposed to paying just the minimum amount due. When the remaining balance is carried forward to the next month, it not only attracts a heavy interest, but also reduces your score.
  • If you have a current loan, ensure that you make the monthly payments within the pre-defined date to improve your CIBIL Score.
  • If you feel you may forget paying within the due date, give standing instructions to your bank to auto-debit the amount outstanding against your name every month on a pre-determined date. This date can be set as per your convenience, so that you can maintain the necessary balance in your bank account on the stipulated date. An unsuccessful auto-debit process attracts a heavy charge payable to the bank.
  • Avoid transactions that reflect a poor credit history such as withdrawing cash against your Credit Card. This raises a flag for lenders as it indicates your current financial constraints.
  • Check CIBIL Score
and Report before applying for a loan to make sure there are no inaccuracies, repetitions or omission of transactions. If you find errors or fraudulent transactions, you should raise a CIBIL dispute and get it rectified before you apply for the loan.
  • Thoroughly read the loan document and clarify all your doubts before signing, so that you are well aware of all the terms and conditions, and does not take steps that may adversely affect your CIBIL Score.
  • Opt out from being a loan guarantor. If the borrower defaults on payments, it will adversely affect your CIBIL Score. Also, the concerned bank or financial institution might ask you to pay off the debt on behalf of your guarantor.
About the Author

Hi My Self Rishi working as Insurance Agent at Coverfox where I used to work with clients understand their requirement and provide suitable insurance services.

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Author: Rishi Agarwal

Rishi Agarwal

Member since: Aug 01, 2018
Published articles: 1

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