4 Brilliant Ways To Improve Your credit card CIBIL score

Maintaining a good credit score makes life instantly easy. A good credit score represents an individual’s inclination towards keeping up with their bill payments, and portrays their overall sense of responsibility. Sustaining a good credit card CIBIL score provides you with several benefits—from getting approved easily for a loan, to buying a house via home loans with nominal interest. 

Financial institutions also find it easier to provide those individuals who own good credit score standings with additional benefits, such as faster approval of a credit card. Missing one or a few bill payments can, therefore, adversely impact your credit score. 

This does beg the question: if you had already missed making a few credit card bill payments, is there any way to recover from this situation? We recognize that credit cards can provide much-needed relief from certain financial burdens. 

Especially during emergencies when you require immediate funds, credit cards can act as a safety net by giving you instant access to cash. For this reason, in this article, we list down four intuitive ways through which you can improve your credit card CIBIL score. 

Although these below-mentioned ways are quite obvious to help you build your credit score, many cardholders only follow one (or two at the most) of these ways, rather than following all at the same time. We also briefly explain what a credit limit is in credit cards.

But first, what is the credit card CIBIL score?

CIBIL is one of the leading credit rating agencies in India. The CIBIL score is used as a comparison chart based on which the individual credit standing of every individual in India is assessed. The CIBIL credit score ranges from 300 to 900. The higher you rank, the greater is your creditworthiness. Maintenance of a score of 700 or above is ideal.

Methods to follow to ensure you have a great credit card CIBIL score

1.       Tailor-make your credit limit

Understanding your credit utilisation ratio and how to compute it is important in improving your credit standing. The credit utilisation ratio refers to the level of credit you use (how much you owe) divided by the total level of credit available (credit limit).

If you are an individual that uses more credit than you should, then customising your credit limit is important. Most individuals just accept the credit limit they have and try to control their credit usage. However, dealing with this problem at its source by reducing your credit limit would be more helpful. Reaching out to your credit card issuer is the first step in addressing this problem and setting a credit limit.

Additionally, if you are not yet credit responsible, then applying for new credit in moderation is the key to improving your credit card CIBIL score. Having just one credit source is recommended. However, if this is not possible, then applying for new credit should be done cautiously so as to not portray to your credit grantors an image of you excessively using credit.

2.       Apply for long tenor loans

During emergencies, most loan applicants do not fully think through the type of loan they are applying for. However, being aware of the type of loan you are applying for is important. Investing in long tenor loans, in specific, will buy you some much needed time to arrange for the necessary funds to repay your loans. It will also reduce your equated monthly instalment (EMI) amounts drastically, so that you can pay back the amount in time with no frustration. Choosing appropriate EMI repayment options that suit your monthly income levels is important as well. Paying your dues on time is one of the greatest keys to improving your credit card CIBIL score.

3.       Keep track of your co-signed, joint and guaranteed accounts

Keeping an eye on all the accounts that you share with other individuals is important in improving your credit card CIBIL score. Although not much heed is paid to other accounts, especially when jointly owned, it is all the more important to monitor it. Payment defaults made by the joint owner of the account can reflect badly on you as well. Checking these accounts at least once a month is recommended.

Checking your CIBIL report every month will also provide you with pointers as to how to improve this score. In this report, a detailed assessment of which account is responsible for lowering your score will be mentioned. Sometimes, the CIBIL report may come with errors and it is important to rectify this when it happens. Submitting a CIBIL Dispute Resolution Form is necessary to rectify any error.

4.       Follow a credit mix

If you depend on credit to finance your transactions, then following a lifestyle that engages with credit mixes is important. Instead of having all your credit come from just one source, it is important that you use your credit in moderation from different sources. Several unsecured loans can paint a bad image of yourself in the books of certain credit grantors. Owning both secured loans (home loans, for instance) and unsecured loans (such as credit cards) is important. This will pave the way for you to gain access to the benefits of different credit sources. In other words, looking thoroughly at all the credit options that stand before you may help you find low-interest loans, with higher loan granted amounts (or vice versa) to satisfy your credit consuming needs.