CIBIL score is a 3-digit numeric summary of credit history and a crucial requirement to enjoy home loan approval. The said score provides an insight into an individual's credit standing and helps lenders understand his/her repayment capability and payment track record. Usually, a CIBIL score between 750 and 900 is considered to be favourable. The higher your CIBIL score, the better are your chances of a loan approval.
Maintaining a high CIBIL score also makes an individual eligible for a higher loan quantum at a lower interest rate. Read on to know how to increase CIBIL score to improve your borrowing experience.
Here’s how to increase credit score quickly:
Tip 1 – Pay credit card bills on time
Paying credit card dues on time can help increase credit score. Plus, it saves credit cardholders from attracting any interest for late payment. Automated credit card payment services can prove useful in settling payment card dues on time.
Tip 2 – Refrain from applying for multiple loans at once
Every time a borrower applies for a new loan, it mandates a hard inquiry that stays on a credit report for a long time. This erodes credit score and sends across a message that the loan applicant is a habitual creditor and may have difficulty repaying the home loan. Hence, applying for several loans within a small window can impact your credit score negatively.
Tip 3 – Maintain a low FOIR
FOIR (fixed obligation to income ratio) is a crucial factor to secure loan approval. A low FOIR indicates fewer financial obligations and greater capacity to repay new loans. So, those wondering how to increase CIBIL score should try to maintain a low FOIR, preferably between 40% and 50%.
Tip 4 – Maintain a healthy mix of credit
Maintaining an ideal mix of secured and unsecured loans with long and short tenor helps improve credit score quickly. However, having too many active unsecured loans can be detrimental to the CIBIL score.
Tip 5 – Check and rectify CIBIL report
Those looking into how to improve CIBIL score immediately should make it a point to review their credit history on a frequent basis. Often discrepant information regarding debt repayment or inaccurate credit information erodes existing credit score. Hence, it is important to check CIBIL report to identify and rectify the mistakes on time.
The minimum CIBIL score requirement to avail of a housing loan from Bajaj Housing Finance is 750. Individuals with a CIBIL score of 750 or above can gain instant approval on their home loan application if they satisfy the other requirements. This is why it is important to know how to improve CIBIL score fast.
Those pondering on “how to increase my CIBIL score?” should try to repay their outstanding credits on time and avoid accumulating debt to boost their score.
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Last update on 11-Mar-2021
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