Table of Contents
Want to improve your CIBIL score? Are you planning to apply for a home loan, car loan, or even a credit card, but worried about your CIBIL score? You are not alone. A low CIBIL score can be a significant roadblock to your financial goals. But the good news is, it’s not permanent. Transitioning from a low to a high score is more convenient than you think with the proper knowledge and discipline.
This guide will explore what a CIBIL score is and why it matters so much, and it will offer a step-by-step roadmap to improve your score and unlock a better financial future.
Master the stock market in Tamil with expert trader Nagaraj—Join Entri Finacademy!
What is a CIBIL Score?
Think of your CIBIL score as your financial report card. A 3-digit number ranging from 300 to 900 that shows how responsible you have been with borrowing and repaying money. This score is generated by TransUnion CIBIL, one of India’s leading credit information companies.
- 300-550: Poor
- 551-650: Average
- 651-750: Good
- 751-900: Excellent
Lenders like banks and NBFCs use this score to decide if you are a low-risk or high-risk borrower. A higher score means you are more likely to get your loan approved.
Why is it so important?
1: Who was the first woman President of India?
Your CIBIL score is more than just a number; it’s a key that unlocks many financial doors. Here’s why it’s so critical:
- Loan Approvals: This is the biggest one. A high CIBIL score significantly increases your chances of getting a home loan, personal loan, car loan, or any other type of credit. Most lenders have a minimum score requirement (usually 750+) for loan approval.
- Better Interest Rates: A higher score doesn’t just get you approved; it can also get you lower interest rates. Banks see you as a reliable customer and reward you with better terms, which can save you thousands of rupees over the loan’s duration.
- Credit Card Approvals: Want a premium credit card with great rewards? A strong CIBIL score is often a must. It can also help you get a higher credit limit.
- Quicker Loan Processing: With a good score, your loan application process is often faster and requires less paperwork, as lenders see you as less risky.
Free UPSKILLING Courses!
Take your first step toward mastering in-demand skills, acing interviews, and securing top-tier jobs with Entri's free upskilling courses.
Start Learning!Top Reasons Why Your CIBIL Score May Be Low
Understanding why your score is low is the first step to fixing it. Here are some common reasons:
- Late Payments: Missing or delaying your EMI or credit card payments is one of the most significant factors that damage your score.
- High Credit Utilisation Ratio (CUR): If you consistently use a large portion of your available credit limit (e.g., using ₹45,000 out of a ₹50,000 limit), it signals lenders that you are credit-hungry and may have trouble repaying.
- Too Many Loan Applications: Applying for multiple loans or credit cards quickly results in several “hard inquiries” on your report, which can lower your score.
- Errors in Your CIBIL Report: Sometimes, the report may have mistakes, like a closed loan still showing as active or incorrect payment information.
- Closing Old Credit Accounts: Closing an old credit card is a good idea, but it can reduce your credit history length, negatively impacting your score.
- Having No Credit History: If you have never taken a loan or credit card, you won’t have a CIBIL score. This makes it difficult for lenders to assess you.
Top Proven Ways to Improve Your CIBIL Score
| Strategy | Actionable Step | How it Helps Your Score |
| 1. Pay Bills on Time | Set up automatic payments or reminders for all your EMIs and credit card bills. Always pay at least the minimum amount due before the deadline. | This has the most significant positive impact on your score, showing you are a reliable borrower. |
| 2. Keep Credit Utilisation Low | Aim to use less than 30% of your total credit card limit. For example, if your limit is ₹1,00,000, keep your spending below ₹30,000. | Low utilisation shows that you are not dependent on credit and can manage your finances well. |
| 3. Regularly Review Your Report | Check your CIBIL report at least once every few months for any errors or inaccuracies. | You can get errors corrected by raising a dispute with CIBIL, which can instantly improve your score. |
| 4. Avoid Multiple Hard Inquiries | Only apply for new credit when you genuinely need it. Avoid applying for loans or cards “just to see” if you get approved. | This prevents your score from dropping due to too many inquiries in a short time. |
| 5. Maintain a Healthy Credit Mix | Try to have a mix of secured loans (like home or auto loans) and unsecured loans (like personal loans or credit cards). | Lenders like to see that you can responsibly manage different types of credit. |
| 6. Don’t Close Old Accounts | Keep your oldest credit card account open, even if you don’t use it much. Make a small purchase on it every few months to keep it active. | This preserves the length of your credit history, which is a positive factor for your score. |
| 7. Consider a Secured Credit Card | If you have no credit history, get a secured card against a fixed deposit (FD). Use it responsibly to build a positive history. | This is an excellent way for beginners to start their credit journey and build a good score from scratch. |
If you’re struggling to manage your finances, consider educational resources. Entri App’s personal finance courses provide beginner-friendly content to help you budget, save, and make smarter financial decisions.
How Long Does It Take to Improve a CIBIL Score?
Improving your CIBIL score is a marathon, not a sprint. You won’t see changes overnight. Generally, it can take anywhere from 4 to 12 months to significantly improve your score after you start implementing good financial habits.
Lenders report your payment behaviour to CIBIL every 30-45 days. So, positive changes will start reflecting in your report after a few billing cycles. The key is to be consistent.
Free UPSKILLING Courses!
Take your first step toward mastering in-demand skills, acing interviews, and securing top-tier jobs with Entri's free upskilling courses.
Start Learning!Tools to Check and Track
It’s essential to monitor your score regularly. You can get one free full credit report every year directly from the TransUnion CIBIL website. Additionally, many financial platforms offer free CIBIL score checks, such as:
- Paisabazaar
- BankBazaar
- OneScore
- Paytm
These platforms provide a monthly updated score and a summary of your report, helping you track your progress easily.
Myths About CIBIL Score (Busted)
There are many myths surrounding CIBIL scores. Let’s bust a few common ones:
Myth 1: Checking my own score will lower it.
Fact: When you check your score, it’s a “soft inquiry” with no impact. Only when a lender checks your score for a loan application (a “hard inquiry”) does it affect your score slightly.
Myth 2: A high salary means a high CIBIL score.
Fact: Your income is not a part of your CIBIL report. A person with a lower salary but excellent repayment habits can have a higher score than a high earner who pays late.
Myth 3: Using a debit card helps my CIBIL score.
Fact: Debit card transactions are not credit. They do not involve borrowing and therefore are not reported to CIBIL or any other credit bureau.
Myth 4: Settling a loan is the same as closing it.
Fact: “Settling” means you paid a partial amount of the due, and the lender agreed to close the account. This “Settled” remark negatively flags your report and hurts your score. Always aim to pay in full and get a “Closed” status.
Conclusion
Your CIBIL score is a powerful financial tool that you can control. By paying your bills on time, managing your credit responsibly, and regularly checking your report, you can build a strong score that opens doors to your financial dreams.
Take that first step today. Invest in your financial knowledge, gain the needed discipline, and turn your financial health into your biggest asset.
Download the Entri App to begin your journey towards financial literacy. Unlock exclusive courses, guidance, and community backing.
Master intraday, options & forex trading in your language with Entri Finacademy!
|
Related Articles |
| 8 Steps to Become a Profitable Trader in 2025 |
| Why Should Women Be Financially Independent? |
| How to Invest Smartly in Stock Market in 2025 |
Free UPSKILLING Courses!
Take your first step toward mastering in-demand skills, acing interviews, and securing top-tier jobs with Entri's free upskilling courses.
Start Learning!Frequently Asked Questions
What is considered a good CIBIL score in India?
A score of 750 or above is considered good to excellent by most lenders in India and increases your chances of getting a loan approved.
Can I start building my CIBIL score if I have no credit history?
Yes! You can start by getting a beginner-friendly credit card or a secured card against an FD. Paying these bills on time will help you build a positive credit history.
How can I remove a late payment remark from my CIBIL report?
A genuine late payment remark cannot be removed. It will stay on your report for up to 7 years. However, if the remark is an error, you can raise a dispute with CIBIL to get it corrected.
Will my CIBIL score drop if I don't use my credit card at all?
Not using your card won’t directly lower your score. However, the card issuer might deactivate the card due to inactivity, which could then affect your credit history length and utilisation ratio. It’s best to make a small transaction every few months.
How often should I check my CIBIL score?
It’s a good practice to check your score once every 3-4 months. This helps you stay updated on your financial health and catch any potential errors early.
