6 Simple Tips on How to Maintain a Good CIBIL Score

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How to Maintain a Good CIBIL Score

3 min 03 May 2024
Highlights:
  • Significance of a Good CIBIL Score
  • 6 Ways to Maintain a Good CIBIL Score
  • Tips to Improve Your CIBIL Score

A CIBIL score evaluates your creditworthiness and is represented by a three-digit number between 300 to 900. It is authorized by the Credit Information Bureau (India) Limited. When you apply for a Home Loan, one of the first things that lenders review is your CIBIL score. This score provides a precise idea of your credit and repayment history, ultimately indicating your creditworthiness.

Significance of a Good CIBIL Score

A good credit score can help you secure more competitive interest rates on Home Loans, which can significantly reduce the overall cost of borrowing. If you have a strong credit score, lenders are more likely to approve your loan application. A high credit score may also qualify you for sizeable funds, which can be beneficial when purchasing a more valuable property. Borrowers with good credit scores have better negotiating power and can secure better terms and conditions with lenders. 
 
The lender typically regards a credit score of 750 or higher as the preferred score for any loan. However, the credit score range is subdivided as follows: 
 

Credit Score  

Rating 

800 to 900 

Excellent  

750 to 800 

Very Good 

625 to 750 

Fair 

625 and below  

Low 

Read Also: Minimum CIBIL Score for a Home Loan 

6 Effective Ways to Maintain a Good CIBIL Score 

As discussed previously, maintaining a good CIBIL score is important as it impacts an individual's creditworthiness and financial credibility. The following are 6 ways of maintaining a good CIBIL score:

1. Pay bills on time 

This is one of the most important factors in maintaining a good credit score. Late payments can harm your credit rating, so it's vital to pay your bills on time. This includes credit card bills, loan EMIs, and any other dues you may have.

2. Keep credit utilization low

Your credit utilization ratio is the amount of credit you are using compared to your total available credit limit. It's recommended to keep your credit utilization ratio below 30% to maintain a good credit score. High credit utilization can indicate that you are relying too much on credit and may not be able to pay back your debts. 

3. Regularly check your credit report 

It's important to review your credit report periodically to ensure that all information is accurate. Errors or discrepancies on your credit report can negatively impact your credit score. If you find any inaccuracies, it's important to dispute them promptly. 

4. Limit credit inquiries  

When you apply for credit, the lender will check your credit report. Too many credit inquiries within a short period can signal financial distress to lenders and lower your score. It's recommended to limit credit inquiries and only apply for credit when necessary. 

5. Diversify credit types:

Having a mix of credit types, such as credit cards, loans, and a mortgage, can positively impact your credit score. It demonstrates that you are capable of responsibly handling different types of credit. 

6. Maintain a long credit history:

The length of your credit history also matters. Keeping older accounts open and active demonstrates a long history of responsible credit management, which can have a positive impact on your credit score. 

Read Also: How to Check Your CIBIL Score Online for Free 

Tips to Improve Your CIBIL Score 

Here are some ways to improve your CIBIL score before applying for a Home Loan: 

  • Maintain a credit utilisation ratio below 30% 
  • Avoid utilising the entire sanctioned amount 
  • Compare various lenders to obtain the best interest rates and minimise costs 
  • Apply for a loan as a co-signer only if necessary 
  • If you are new to credit, consider opting for a loan with a shorter tenor and lower value, and repay it sincerely to establish a credit history. 
  • Keep credit inquiries to a minimum 
  • Disclose all other income sources 

*Terms and conditions apply. 

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DISCLAIMER:

While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.

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