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Effective Ways to Improve Your CIBIL Score

Maintaining a good CIBIL score requires careful credit management. Though your credit score will not improve overnight, there are a few steps you may take to improve it. Improving your CIBIL score can take anything from 6 months to a year. Moreover there are a lot of benefits that come along with a good credit score. Following are some of the effective ways to improve your CIBIL score:

Pay Your Loan EMIs and Credit Card Bills on Time: Make sure you pay your loan EMIs and credit card bills on time if you want to keep your credit score in good shape. Regular EMIs show the bank that you are responsible and help you enhance your CIBIL score.

Loans of Various Types: Your credit score can be improved by having a good mix of secured and unsecured loans. If you only take out unsecured loans, you may appear to be a high-risk borrower.

Keep your debt-to-income ratio low: While loan repayments might help reduce the amount owed over time, it’s also a good idea to avoid going over your credit card limit too frequently, as this will harm your creditworthiness.

Avoid Applying for Numerous Credit Cards at the Same Time: Applying for multiple credit cards at the same time may appear appealing since they give a quick supply of cash, but managing too many credit cards can be difficult at times, and missing even a single EMI will harm your credit score.

Keeping Old Accounts Open: Having an old debt on your credit report and paying its EMIs on time indicates your reliability and can help you enhance your credit score.

Benefits of High CIBIL Score

The above are some of the ways on how to improve CIBIL score. However, there are a lot of benefits that come along with a high CIBIL score, that are as follows:

Credit card fees and interest rates are both low

If your credit score is good, you will nearly always be able to get the best interest rates and pay lower finance costs on credit card balances and loans. You will be able to pay off your debt faster if you pay less interest on it.

Credit card and loan approval is rather simple 

When you have a high credit score, your chances of receiving credit improve. In general, you should be able to apply for a loan or a credit card without fear of being denied. This is because having a good CIBIL score makes you creditworthy for a loan, therefore your loan or credit card application is more likely to get approval.

Increases your bargaining power

You can get better credit card and loan interest rates if you have a good credit score. The bank will charge you a hefty interest rate if your cibil score is low while applying for a loan. You won’t be able to further negotiate terms with the bank with a low CIBIL score.

Loan Top-up

You may easily apply for a top-up and raise the loan amount on an existing loan by examining your credit score, which banks will consider when adding money to the existing loan amount.

These are some of the advantages of having a high CIBIL score. As a result, it’s critical to review your credit reports on a frequent basis to avoid any inaccuracies that could affect your CIBIL score. It is not necessary, however, that your CIBIL score will remain unchanged after you improve it. Your CIBIL score will suffer if you miss or default on any of your loan payments, and it may plummet.

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