A credit score represents your creditworthiness. So, it is crucial that you know how to check CIBIL score online and make necessary improvements. Remember that maintaining a good score requires discipline and commitment.
That said, you can boost your CIBIL score by maintaining healthy financial habits. Read on to know how you can reach an optimal credit score, ways to improve it and more.
7 Tips for Maintaining a Healthy CIBIL Score
Whether you have applied for a loan recently or plan to avail one soon, maintaining a good credit score is essential. Here are tips to achieve it.
1. Pay Your EMI and Credit Card Bills on Time
One of the most crucial factors that affect your credit score is your repayment discipline. Any time you make a late payment of your credit card bill or default on your EMI, your credit score will take a hit.
In addition, the lender will levy late payment charges and penalties. If they accumulate for long enough, they will cost you more than the amount you have borrowed. In addition, you may face difficulty in getting credit in the future. So, be mindful of what you borrow and repay on time.
2. Review Your Credit Report Periodically
Moreover, monitoring your CIBIL score will help you assess your financial standing and credit-readiness.
A credit report contains a detailed account of your financial history and credit behaviour, which allows you to make necessary changes in your spending patterns. Keeping a tab on your report and score helps you maintain the minimum CIBIL score for personal loan or any other form of credit.
3. Maintain a Healthy Mix of Secured and Unsecured Forms of Credit
Many borrowers are unaware that 10% of their CIBIL score depends on the types and forms of credit they avail. Lenders prefer a mixed bag of credit, as it gives them a fair idea of your efficiency in handling various types of debt.
See if you can maintain a diverse portfolio of secured and unsecured loans, such as home loans, car loans, personal loans, credit cards, gold loans, etc. This helps you boost your CIBIL score and, thus, enjoy hassle-free loan approval in the future.
4. Avoid Multiple Applications Resulting In Many Hard Inquiries
When you apply for a loan, lenders ask for your PAN card number, using which they get your credit report from the credit bureaus. This is to check if you have the minimum CIBIL score for a personal loan, home loan or other forms of credit.
This process is known as a hard inquiry, and can hurt your score a bit. But if you apply for loans with multiple lenders at the same time, your credit score can decrease substantially. This is because multiple hard inquiries suggest you are desperate for funds.
Hence, avoid applying for multiple loans simultaneously to maintain a good credit score. Remember that this drop in your credit score is temporary, and you can fix this issue by repaying your bills and EMIs on time.
5. Keep Your Credit Utilisation Ratio Low
Another important factor that impacts your CIBIL score is the utilisation ratio. Ideally, you must not use more than 30% of your total sanctioned limit, as it can affect your CIBIL score negatively.
Utilising a higher limit indicates you are hungry for credit. Hence, it is always ideal to use credit within the prescribed limit to stay on top of your finances.
6. Avoid Exercising the Debt Settlement Option
Lenders allow borrowers to request settlement of their debt, especially due to financial struggles. This could arise out of a financial emergency, unexpected job loss, or other reasons. In such cases, lenders propose a debt settlement option, where they reduce the debt amount.
While this may give you a short-term benefit, it will impact your CIBIL score in the long term. Debt settlement points to your inability to pay the entire credit balance you owe.
Once the lender forwards this information to the credit bureau, it becomes a part of your permanent record. This will not only affect your score, but also your creditworthiness for future loans.
7. Maintain a Longer Credit History
A longer credit history increases your creditworthiness, giving sufficient information to the lender for processing your loan. So, keeping your credit accounts open for longer is better for maintaining a good credit score.
Your older credit card accounts may contain a history of good repayment behaviour without any defaults or late payments. So, it is ideal not to close them.
How to Check CIBIL Score Online
If you are wondering how to check CIBIL score online, the solution is quite simple. You can check your score on the official CIBIL website or via a financial marketplace or institution.
Follow these steps to get your credit score on the CIBIL website:
- Step 1: Visit the CIBIL website at https://www.cibil.com/
- Step 2: Click on the ‘GET FREE CIBIL SCORE & REPORT’ tab
- Step 3: Fill out the required information, such as your name, date of birth, mobile number, ID type, etc.
- Step 4: Select ‘ACCEPT & CONTINUE’
- Step 5: Once done, you will get your score and report on email
This way, you can check your CIBIL score for free once a year. However, if you want to check it periodically, you can opt for a subscription plan and monitor your report regularly.
How to Boost Your Credit Score
Here are some ways to improve your credit score.
- Reduce Your Credit Utilisation Ratio: Maintain a ratio below 30% to build an optimal score
- Debt Consolidation: Get a debt consolidation loan to streamline payments and reduce the chances of defaults
- Correct Errors on the CIBIL Report: Discrepancies in the CIBIL report can also lower your score, so make the required changes to fix your score
- Opt for Credit When It is Essential: Avoid taking unnecessary loans and avail credit only when required
- Clear Bills on Time: Pay your EMIs and credit card bills on time
- Use Your Credit Card Wisely: Use your credit card only when it is necessary, as frequent usage can increase your credit utilisation ratio
In conclusion, you must know how to check CIBIL score before you can take any actions to make the required changes for improvement. You can avoid delays in your loan application by periodically monitoring your score. Following this practice regularly can help you get quick loan approval during emergencies.