If you are a first-time loan applicant, your CIBIL score becomes all the more critical in deciding whether you would be eligible for a loan. An individual earning good CIBIL scores helps get a loan and ensures better interest rates and favorable terms. For an initial applicant building and maintaining a good credit score may seem daunting however it can be pretty simple with the right hacks! Here are some excellent tips to increase your CIBIL score.
CIBIL Score Boosting Tips for First-Time Loan Applicants
Pay Credit Card Bills on Time
The simplest way to boost your CIBIL score is to make timely payments on your credit card bills. One missed or delayed payment shatters your score. Always ensure that at least the minimum amount due is paid, but the full balance payment is considered best practice.
Pro Tip: Use reminders or setup automatic payments to ensure you never miss a due date.
Maintain a Low Credit Utilization Ratio
Your credit utilization ratio is the amount of your available credit that you have used. A high ratio indicates that you are hungry for credit, and this will reduce your score. Keep it under 30%.
For instance, if one's credit card limit is ₹1,00,000, then one should ideally spend not more than ₹30,000 in each billing cycle.
Avoid Multiple Loan or Credit Applications
Applying for several loans or credit cards simultaneously makes you look desperate for credit, which affects your score. One application goes with a hard inquiry, subsequently affecting your CIBIL score.
Hack: Avoid filling out multiple applications by researching loans and eligibility requirements beforehand.
Check Your CIBIL Score Regularly
Monitoring your CIBIL score helps you know your standing and gives details on areas suitable for improvement. It also enables you to detect and challenge any mistakes in your credit report.
Ruloans provides a facility to check the CIBIL score online for free. It allows access to the credit report in real time without impacting the score.
Build a Credit History
As a new applicant, lenders may be apprehensive due to the absence of a credit history. However, it is the building of the credit history that will help improve the CIBIL score. One can obtain a secured credit card or a small personal loan for establishing creditworthiness.
Tip: Make small purchases with your credit card and pay them off monthly.
Diversify Your Credit Portfolio
A balanced mix of credit types exists secured loans such as home loans and unsecured loans like personal loans. This directly contributes to a better CIBIL score because it demonstrates your capability to manage different kinds of credits effectively.
Remember: Don't overload yourself with overheads. There's balance.
Avoid Closing Old Credit Accounts
The length of the credit history forms an integral part of the CIBIL score. Keeping older credit card accounts open, even if not used much, helps build a more extended credit history.
Caution: Ensure you don’t have outstanding dues on old accounts.
Stay Away from Co-Signing Loans
Co-signing a loan for someone can definitely affect your CIBIL score if the primary borrower defaults or skips payments. Only co-sign if you are confident in the borrower's repayment capability.
Final Words!
A higher CIBIL score is something that first-time loan applicants must remember because it plays a vital role in determining the terms of the loan provided. One can build a robust credit profile by implementing these hacks and keeping financial discipline. It should be noted that an excellent CIBIL score requires time but is totally doable with wise efforts.
Start your financial journey on the right note with Ruloans, India's foremost loan distributor. Check your CIBIL score for free today and take the first step towards financial empowerment with Ruloans. For more personalized guidance and to discover our extensive portfolio of loan products, visit our platform to get your CIBIL score online quickly.