5 proven ways to maintain an excellent CIBIL score

When availing of any form of credit, lenders will require you to meet certain criteria. Usually, they will assess your finances along with your credit profile. The latter is a key facet and marker of your financial health. This is why you must know the CIBIL score meaning and know how to maintain a good score best. Lenders determine your creditworthiness based on your Credit Information Report (CIR) and CIBIL score, and a poor score can prove problematic.

In general, you must have a CIBIL score of at least 650 to qualify for most types of credit. However, to get an affordable loan with ease, lenders require borrowers to qualify for a CIBIL score of 750 or higher. Building a good or excellent score takes effort and patience as it isn’t possible to achieve in just a few weeks. Moreover, maintaining it also requires work once you have the desired CIBIL score. The following pointers will guide you on the proven ways to maintain a good CIBIL score with ease.

Be mindful of your credit utilisation ratio

The first rule of maintaining your CIBIL score is to watch your credit utilisation ratio. This is the ratio of the credit you have utilised against the total revolving credit assigned to your profile. For instance, if your total credit limit is Rs.1 lakh and your outstanding dues are Rs.65,000, the credit utilisation ratio is 65%. This percentage is on the higher side as credit agencies generally prefer that you maintain a ratio of 30%.

A lower ratio is always better for your profile as it indicates that you aren’t reliant on credit and can manage it effectively. On the other hand, a high credit utilisation ratio indicates that you are overly reliant on credit and this can affect your score. So, download your CIBIL report before availing credit to check and ensure you stay within the ideal limits.

 Ensure to make all payments on time and in full

There may be certain situations wherein your credit payments aren’t done on time. Common reasons include:

• Non-receipt of the statement

• Relocation of linked bank accounts

In all cases, it is still your responsibility to pay your dues on time and you must do so to maintain your CIBIL score. A common mistake is to also pay the minimum amount due only. While this can minimise the negative on your CIBIL score, you must do all you can to clear the remainder at the earliest. Unpaid dues will reflect poorly on your profile and continue to decrease your score until repaid fully.

 Check your co-signed accounts regularly

Keep track of any co-signed or joint accounts that you are associated with. Even if you aren’t making these payments, you are equally responsible for defaults. Mismanagement of credit impacts all individuals involved and so, you must ensure that payments are made on time. Non-payments will negatively affect your CIBIL score and cause it to dip until the credit is repaid in full. 

Review your credit history at least thrice in a calendar year

Discrepancies in the CIR can be quite common and can occur due to several factors. For one, your lender or credit issuer may not update the credit agencies in time or may send inaccurate information. This will reduce your score the longer it stays unaddressed, which is why you should download your CIBIL report regularly and assess it. Check that all payments are recorded accurately, and all closed accounts are reported. Ideally, you should check your CIBIL report once every 4 months to address all discrepancies on time.

 Avoid making multiple credit applications in a short window

New credit applications will require lenders to make a ‘hard inquiry’ into your credit profile, and these will be recorded in the ‘Enquiries’ section of your report. When done by financial institutions before making a lending decision, such checks will cause a temporary dip in your score. As such, multiple inquiries will lower your score even further, making it difficult to maintain a good CIBIL score.

Following these practices will help you maintain your CIBIL score and steadily build it. Remember, a high CIBIL score is highly valuable to your financial profile, be it for availing of new credit or securing exclusive deals. However, considering that your score is constantly changing, it requires effort to ensure that it doesn’t dip. Regular monitoring helps you get a better idea of your credit profile and any discrepancies you need to address. One easy way to do this is to check your CIBIL score for free on Bajaj Finserv.

You can complete the process in just a few minutes as it has only 3 steps. Enter your details, verify your identity, and view your report. This check doesn’t impact your CIBIL score negatively. So, download the CIBIL report and analyse your profile freely.

Moneycontrol journalists were not involved in the creation of the article