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I still remember the day I applied for my first home loan. I was confident that my finances were in order, but when the bank officer pulled up my CIBIL score, my heart sank. It wasn’t as high as I had assumed, and the loan process became a long and tedious struggle. That experience taught me a valuable lesson: maintaining a good CIBIL score isn’t just about paying bills; it’s about financial discipline and awareness.
Many of us don’t realize the significance of a good credit score until we need a loan or a credit card. A CIBIL score, ranging from 300 to 900, reflects your creditworthiness. A score above 750 is considered good and can make a significant difference when applying for financial assistance. In this article, I’ll share real-life experiences and practical tips to help you improve and maintain a high CIBIL score.
Why Does Your CIBIL Score Drop?
1. Missed or Late Loan Repayments
I once met a friend who was struggling with loan approvals despite earning a decent salary. His mistake? Missing a few EMI payments due to oversight. Even a single missed payment can drastically reduce your score. Life happens—unexpected expenses, job loss, or emergencies—but setting up automated payments can help avoid this issue.
2. High Credit Utilization
A cousin of mine had multiple credit cards and used almost 90% of his credit limit every month. He thought as long as he paid the minimum due, he was safe. However, maxing out your credit limit frequently signals financial distress to lenders. It’s advisable to keep your credit utilization below 30%.
3. Too Many Loan Applications in a Short Period
A colleague of mine once applied for three personal loans within six months. Each time he applied, his credit score took a hit due to hard inquiries. Spreading out loan applications over time is a smarter approach.
4. Becoming a Loan Guarantor
My uncle agreed to be a guarantor for a friend’s business loan. Unfortunately, the borrower defaulted, and my uncle’s credit score plummeted. Being a guarantor means taking full responsibility for the loan if the borrower fails to pay. Think twice before signing up!
5. Errors in Your Credit Report
Another friend noticed his CIBIL score dropping despite making timely payments. After checking his credit report, he found incorrect details—closed accounts still marked as open and an old settled loan appearing as unpaid. Regularly reviewing your credit report can help you spot and dispute such errors.
How to Improve Your CIBIL Score?
1. Pay Dues on Time – No Matter What
If you’ve missed payments, start clearing them as soon as possible. Automating payments using Electronic Clearing Service (ECS) or standing instructions can prevent future delays. Paying credit card bills in full rather than just the minimum due is crucial.
2. Manage Your Credit Utilization
Reduce your dependence on credit cards. If you frequently reach the credit limit, consider requesting an increase in your credit limit while maintaining your spending habits. This lowers your credit utilization ratio.
3. Avoid Multiple Loan Applications
If you need multiple loans, space them out. Applying for too many loans in a short period makes you appear credit-hungry, which negatively affects your score.
4. Keep Old Credit Accounts Active
A friend once closed his oldest credit card, thinking fewer cards meant better financial health. However, old accounts with a good repayment history boost your credit score. Keep them active, even if you use them minimally.
5. Opt for a Healthy Credit Mix
Secured loans (home, auto) and unsecured loans (personal, credit cards) should be well-balanced. If you have too many unsecured loans, it may harm your credit score. If needed, consider taking a small secured loan, like a gold loan or loan against an FD, and repaying it on time to build a strong profile.
6. Monitor Joint Loans & Guarantor Obligations
If you’re a co-borrower or guarantor, ensure that repayments are being made on time. Any defaults will impact your score as well.
7. Dispute Errors in Your Credit Report
If you find inaccuracies in your credit report, raise a dispute with CIBIL or the respective bank. Correcting errors can instantly improve your score.
8. Consider Alternative Credit Options
If your score is low and you struggle to get a regular loan, opt for secured loans like loans against FD or LIC policies. These don’t require a high CIBIL score and can help in rebuilding your credit profile.
Final Thoughts
Improving your CIBIL score is not an overnight process—it requires patience and financial discipline. Looking back at my own journey, I can say that a good credit score isn’t just about getting loans easily; it’s about financial freedom and peace of mind. Small but consistent efforts can ensure you never face rejection due to a poor credit score. Start today, and take control of your financial future!
Hi, my name is Pandit Katvate. I am an experienced blogger and YouTuber with more than five years of experience. Here on https://popglare.com/en you will get all the trending news and celebrity gossip of Hollywood.