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Top 5 CIBIL Improvement Factors

Top 5 CIBIL Improvement Factors

finance
July 9, 2022
5 min read
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Top 5 CIBIL Improvement Factors
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Your CIBIL score is based on your credit report, which is a summary of your overall credit history. A CIBIL score of 750 or above is considered to be ideal for getting your loan or credit card applications approved. 

Since it plays a vital role in the loan or credit card application process, you must try and understand the factors that affect your CIBIL score or credit score

Repayment History

This is perhaps the first thing a lender notices before approving your credit application. An outstanding repayment history depicts that you are creditworthy enough to repay your bills on time. If you have paid your bills on time, your payment history is good. However, if you have failed to pay off your debts, it can leave a negative impact on your credit score and report. 

Credit Mix

Credit mix is yet another important factor used to determine your credit score. It is highly recommended to include different types of credit in your portfolio such as a good mix of secured and unsecured loans, or long and short term loans to improve your credit score. 

While having a less diverse credit portfolio wouldn’t really bring down your scores instantly, the more your credit types, the higher your credit score. 

Credit Utilization Ratio

If you want to maintain a good credit score, make sure that your credit utilization is less than 30%. However, if you are totally not using your credit card, that can cause damage to your credit score as well. Remember, a credit score of 50% or even more is not favored by lenders, since a high credit exposure stands for a higher credit risk. 

Several hard pulls on your credit history

If your credit report showcases a lot of hard pulls in the recent past, it can hamper your credit score. That’s because multiple hard inquiries means that you’re a desperate borrower, and hence considered to be a high-risk candidate by the lender. With the increase in your credit, your credit burden also increases and consequently your credit score lowers. 

Tenure of your credit history

Did you know that you need to have credits for some time to build a good credit score? Well, yes. You read that right. When you have long credit history, lenders assume that you can efficiently manage debts thereby leaving a positive impact on your credit or CIBIL score. 

You must keep in mind that closing down old credit accounts will bring down your credit score. Therefore, you must maintain your old credit cards with minimum transactions to keep your credit score steady.

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Frequently Asked Questions

What is the ideal CIBIL score for acquiring a credit card?

There is no such fixed number required to qualify for a credit card. Each credit card company or bank comes with its own set of terms & conditions for accepting a card application. 

However, if you have a credit score of 750 or above, your credit card or loan approval chances are higher. 

How can I build my credit score faster?

Here are a few tips:

  • Don’t skip your bill payments
  • Ask for an increased credit limit
  • Look for errors on your credit report, and raise a dispute, if necessary
  • Lower your credit utilization
  • Try to maintain a healthy balance between secured and unsecured loans

Can I get credit with no score at all? 

Yes, you can. If you have a salary account with the respective bank or financial institution, you can acquire credit, despite a weak CIBIL score. 

What is the best credit score?

As already mentioned, there’s no such thing called ‘best credit score’, but a score of 750 or above is considered to be best suited for loan and credit card approvals. 

Which bill payments can hurt my credit score?

Generally, credit card bills and loan repayment can hurt your credit score and report.