A good CIBIL score is a must, irrespective of whether you’re applying for big or small loans online. Before applying for a loan, say, on an online loan app, make sure you follow the following tips to ensure a good CIBIL score : 

  • Checking the Credit Report– Checking the credit report is of utmost importance. You will discover loan defaults or payment delays that may have reduced your score here and also other vital information. If you chance upon any negative data on the report, you can always reach out to CIBIL and your lender for correcting the same. Most importantly, it is always best to stay informed about your CIBIL score before applying for a loan. 
  • Fixing Errors- Erroneous information on the credit report may be contributing to a lower credit score. Fix this immediately by going to the CIBIL website and notifying all such erroneous transactions likewise. You will have to rectify the same within a period of 30 days. 
  • Checking your utilisation ratio for credit- First, you should not have been using credit cards to cover all your transactions. Second, your utilization ratio should be a maximum of 30% of the limit or even lower. This will naturally impact your final credit score. The lower your credit utilization percentage, the better for your CIBIL score. 
  • Repeat applications are a strict no-no- Repeatedly applying for credit cards or loans in spite of an application being rejected, will negatively affect your score. The best you can do is wait for your score to improve and apply again. With every credit application, the lender or institution will make an enquiry, called a hard enquiry, for knowing your CIBIL score. With each such request, the score will come down further. Hence, you will seem desperate for credit in this case as well. It is never a good impression to create while applying for a loan. 
  • Keep repaying loans on time– You should never delay loan EMIs and ensure you pay them before their due dates. If you are finding it hard to pay your EMIs on time, approach your lender immediately for a restructuring program which makes things more convenient for you. 
  • Keep paying credit card dues on time– Clear off credit card dues in full and within the due date every month. Do not pay only the minimum balance and leave a sizable outstanding amount pending. Do not default on payments at any time. 
  • Do not go for a quick settlement– Many borrowers often request a settlement deal with their lenders for closing their loans or credit card dues. This is sometimes lower than the actual outstanding amount. While such requests are sometimes approved by lenders, CIBIL scores are negatively impacted as a result. 
  • Too many loans will hinder your chances– Those applying for multiple loans or touching the tail-end of their credit limits, are likely to see poor credit scores. Excessive borrowing is always a red flag for your CIBIL report. 
  • Balancing secured and unsecured credit– If you have too much-unsecured credit, i.e. in the form of personal loans or credit cards, then lenders will view it negatively and your credit score will also be impacted. A balance between unsecured and secured (home loans, car loans, etc.) credit is always recommended. 
  • Keeping an eye on co-applicants and others– Have you been a guarantor for someone else’s loan where payments have been made irregularly with periodic defaults? Do you have a co-applicant for a loan that he or she has not paid on time? These instances will negatively impact your credit score as well. The legendary phrase- Be careful of the company you keep could not have been more apt! 
  • Be responsible– Lenders should view you as a responsible borrower at all times. This is ensured through making payments of all loans and credit cards on time, steadily clearing away unsecured loans whenever you get any surplus funds or bonuses, managing credit wisely, and maintaining a lower level of debt in relation to your income. 
  • Correcting a zero credit history situation– What is a zero credit history scenario? This is where you have never applied for credit before or taken any loan. Hence, being new to the financial system, you will not have any credit score worth mentioning. While some lenders may be happy with it, some may insist on a CIBIL score. Your solution in this scenario is to take a credit card and use it for a few months in a responsible manner. Build up your credit score and history by responsibly using the card and making payments in a timely manner. This will naturally enable a smoother loan application in the future. 

Kiran Pathak

Kiran loves writing about fintech, banking, insurance, healthcare, wellness, travel, lifestyle, and parenting. By day, she is juggling strategy calls and meetings with clients that compelling content is the only way forward and in her spare time, she is raising awareness about the evils of plastic or backpacking with her husband and 2 sons.

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