As an individual living in this credit-driven economy, our penchant for purchasing things on credit is on an all-time high. If we don’t pay our dues on time, our credit score gets negatively affected. Financial success today is measured by how good your credit score is. In India, a high CIBIL score shows the willingness of the borrower to clear his dues and also helps the Institutions, who provide loans, make an informed decision, before granting any loans. A good credit score is anywhere in the range of 700-900. Due to the spending habits of a person or due to other reasons, his credit score may fall to 500 or even below. So what steps can he take to increase his CIBIL score from 500 to 750?

  1. Lowering Credit Utilization Ratio – As a thumb rule, it is favourable if a good credit utilization ratio is maintained. For this one needs to use less than 30% of the total available limit
  2. Avoiding Closure of Older Accounts - Older accounts show your long-term association and connection with the lending institutions, which is considered good by the credit bureaus. This further helps to improve CIBIL score. 
  3. Improving Payment History – An improved payment history plays the most vital role in Increasing CIBIL score.
  4. Monitoring of Credit Reports - Individuals need to regularly (not constantly) check their credit reports, as it helps one understand their creditworthiness and take steps to improve CIBIL score if needed.
  5. Multiple Credit – We should avoid applying for multiple loans, cards and other debt instruments at once as it tends to depict a picture of one who is heavily dependent on credit. This behaviour is immediately tracked by credit bureaus which further leads to a fall in the credit score.
  6. Avoid Inquiries about Credit Cards – An individual’s credit score may get affected if he enquires about other credit cards. Therefore, one should avoid this and instead investigate through online platforms without contacting the Credit card companies thus helping him increase CIBIL score.
  7. Pay EMIs on Time - It is always a very good idea to ensure that one never misses a single EMI or credit card payment. This should be done on or before the due date. Missing a single payment or any delay in the same could lead to penalty charges as well as a reduction in the overall credit score.
  8. Always Pay the Complete EMI Amount - Many people rack up a lot of debt by only paying the minimum amount due. However, you must know that in doing so, the rest of the amount payable will continue to accrue interest, which will further reduce your credit score. On the other hand, making regular ontime payments could help you improve your credit score over a period of 1-2 years (depending on the tenure of the loan).
  9. Pay Off Your Card Balance via Personal Loan - A personal loan has a lower interest rate (11.99%* onwards) compared to that of credit cards. It is advisable to use a personal loan to pay off your credit card balance and then pay the personal loan through regular, more manageable monthly EMIs. 

So, as enumerated above, if the steps mentioned are followed diligently, there is no reason as to why an individual can’t increase his CIBIL score from 500 to 750.

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