Boosting Your Creditworthiness: A Guide to Improving Your CIBIL Score

A Guide to Improving Your CIBIL Score

A solid credit or CIBIL score is vital in today’s financial world. It helps determine loan eligibility, credit card approvals, and job prospects. This article examines practical strategies for maintaining an excellent credit score. Following these steps builds a solid financial foundation and unlocks various opportunities. Let’s explore the secrets: how to improve CIBIL score and keep it in top shape. 

What is a CIBIL score?

The CIBIL score is a three-digit number (ranging from 300 to 900) that indicates an individual’s creditworthiness. Lenders use it to assess the risk of lending. A higher score reduces risk and enhances the likelihood of loan approval, favourable interest rates, and increased credit limits. Maintaining a good score involves paying bills promptly, keeping credit utilisation low, diversifying credit types, and avoiding excessive debt. Regularly reviewing credit reports for errors is crucial. A healthy CIBIL score enhances financial credibility, expands borrowing options, and supports goal achievement.

But how to improve credit scores? How can one pass with flying colours on their CIBIL score report? The answer is scattered within a number of practices.

How to improve CIBIL score?

  • Timely bill payments: Paying bills on time, including credit card bills and loan instalments, significantly impacts one’s credit score. Setting up payment reminders or automatic payments helps individuals avoid missing due dates.
  • Maintaining low credit utilisation: Keeping your credit utilisation ratio below 30% shows responsible credit management and can improve your credit score. This ratio compares the amount of credit you’ve used to your total credit limit.
  • Paying off outstanding debts: Prioritising payments on outstanding balances and reducing overall debt can help improve credit scores over time. Paying off high-interest debts as soon as possible or consolidating multiple debts is also effective.
  • Limiting new credit applications: Applying for credit triggers a hard inquiry on credit reports, temporarily lowering scores. Minimising unnecessary credit applications and applying only when necessary helps maintain a good credit score. 
  • Maintaining a healthy credit mix: Demonstrating the ability to handle different credit responsibilities by having a mix of credit types positively impacts credit scores. However, opening new accounts solely for diversification is not recommended. This might be counterproductive over time.
  • Regularly reviewing credit reports: Obtaining credit reports from credit bureaus like CIBIL is crucial. Checking for errors, incorrect information, or fraudulent accounts and promptly disputing discrepancies helps maintain a good credit score. You can also download the OneScore app, which provides free credit scores and credit reports every month. 
  • Avoid closing old credit accounts: Closing old credit accounts can negatively impact credit history and average account age, both of which influence credit scores. Keeping the oldest accounts active is advisable, especially if they are in good standing. This could better your credit score in your CIBIL report. 
  • Clearing outstanding payments: Promptly settling any outstanding loan or card payments is essential. Not making payments can put a defaulter tag on your profile. 
  • Using credit responsibly: Engaging in responsible credit behaviour, such as making regular payments and using credit judiciously, gradually improves credit scores. Avoiding maxing out credit cards or making late payments is essential.

These were some tips on how to improve credit scores. But before we conclude, let’s also explore the common credit mistakes to avoid. 

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5 common credit score mistakes to avoid

  • Neglecting to establish a credit history: Failing to build a credit history can hinder access to credit in the future. It is essential to use credit accounts or explore alternative credit-building options responsibly.
  • Co-signing without caution: Co-signing without caution can expose individuals to significant financial risks and potential damage to their credit scores. When acting as a co-signer on a loan, an individual assumes responsibility for repaying the debt if the primary borrower defaults. In such cases, the co-signer’s credit history and creditworthiness may suffer negative consequences. So assess the risks associated with co-signing. 
  • Settling debts without negotiation: Settling debts without engaging in negotiation can result in negative marks on your credit report. Negotiating settlements that reflect a “paid in full” status is advisable to minimise the impact on your credit.
  • Overlooking small credit lines: Even small credit lines, such as store-specific cards, can influence your credit score. Managing credit utilisation on these cards is essential for maintaining a positive credit profile.
  • Ignoring credit mix diversification: Maintaining a balanced credit mix, including credit cards, secured & unsecured loans, and mortgages, showcases responsible credit management. It is essential to strive for a diverse credit mix. But as mentioned earlier, avoid opening unnecessary accounts solely for diversification purposes.


Maintaining a healthy CIBIL score and credit report is paramount for financial success. It enables individuals to access favourable loans, secure credit cards, and seize job opportunities in finance. Individuals can strengthen their creditworthiness through responsible financial habits like paying on time, lowering credit utilisation, and diversifying credit. Regularly monitoring credit reports and settling outstanding debts are crucial to safeguard one’s credit standing.

Remember, improving and maintaining credit scores come with practice, patience and persistence.

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