Maintaining a good credit score is essential for financial stability and accessing better loan options. If your CIBIL score is around 600 and you aim to reach 750, you’re on the right path to improving your financial health. A higher score opens doors to better financial opportunities and lower interest rates.
Let’s explore 13 smart ways how to increase CIBIL score from 600 to 750 and secure your financial future.
- Clear Existing Debt
Start by paying off your existing debts. Clearing your debts is crucial for improving your credit score and regaining control over your finances. Outstanding loans and unpaid credit card bills lower your credit score and accumulate high-interest charges. Prioritising debt repayment is the foundation of better financial health. It helps you manage your finances more efficiently and reduces the burden of high interest costs.
- Maintain Older Credit Cards for Extended Credit History
Older credit cards play a significant role in your credit score. Keeping these cards active helps build a longer credit history, showing lending institutions your ability to manage credit responsibly over time. This extended history can improve your credit score significantly. A longer credit history indicates stability and reliability, key factors lending institutions consider when evaluating creditworthiness.
- Ensure Timely Payment of Loans/Credit Card Bills
Paying your loans and credit card bills on time is fundamental to a strong credit profile. Consistent, timely payments demonstrate reliability to lending institutions. Late payments attract penalties and higher interest rates and cast a shadow on your credit score. To avoid late payments, set up reminders or automate your payments. This ensures you never miss a due date, helping to maintain and improve your credit score.
- Make Timely EMI Payments and Set Reminders Accordingly
If you have an installment loan, such a 5 Lakh loan for a home or car, make sure you pay your EMI on schedule. Late payments can harm your credit score and put your assets at risk. Setting reminders can help you stay on track with your payments. Maintaining a disciplined repayment schedule safeguards your assets and contributes positively to your credit history.
- Opt for a Longer Tenure When Acquiring a Loan
When taking out a loan, choosing a longer tenure can help. It reduces your monthly EMI, making it easier to manage payments and avoid defaults. Though it extends the loan duration, it positively impacts your credit history by ensuring consistent payment records. A longer tenure spreads out your financial obligations, making them more manageable and reducing the risk of missed payments.
- Steer Clear of Accumulating Excessive Debt Concurrently
Avoid taking on too much debt at once. High levels of outstanding debt make you a riskier borrower in the eyes of lending institutions. Balance your debt load to maintain a healthy credit profile. Managing your debt wisely ensures you can meet your financial obligations without overextending yourself. This balance is crucial for maintaining and improving your credit score.
- Avoid Owning an Excessive Number of Credit Cards
Having too many credit cards can signal over-reliance on credit. Limit the number of cards you own and manage them wisely to improve your creditworthiness. Too many cards can lead to overspending and difficulty managing payments, negatively impacting your credit score. Keeping a reasonable number of credit cards and using them responsibly is key to maintaining a good credit profile.
- Tailor Your Credit Limit to Align with Your Expenses
Request a credit limit that matches your income and spending patterns. A higher limit is only beneficial if managed responsibly. Matching your limit to your financial capacity helps prevent excessive debt. Ensuring your credit limit aligns with your financial situation is essential to avoid unnecessary financial strain and maintain a healthy credit utilisation ratio.
- Establish a Diverse Mix of Loans for a Strong Credit History
Lending institutions prefer a diverse credit mix, which includes credit cards, instalment loans, and mortgages. Managing various types of credit responsibly can enhance your credit score. A diverse credit portfolio shows lending institutions you can handle different types of credit effectively, which boosts your creditworthiness. This diversity in your credit mix is a positive signal to lending institutions about your financial management skills.
- Regularly Review Your CIBIL Report for Any Errors
Regularly checking your credit report helps maintain a healthy credit profile. Errors or inaccuracies can lower your score unfairly. Dispute any discrepancies with the relevant credit bureau to ensure your report is accurate. Regular reviews of your credit report help you promptly identify and correct any mistakes, which is essential for maintaining an accurate and favourable credit score.
- Restrict the Frequency of Loan Applications
Frequent loan applications can negatively affect your credit score. It suggests financial instability. Apply for loans only when necessary to avoid overextending yourself. Each loan application results in a hard inquiry on your credit report, which can lower your score. Limiting the number of applications helps maintain your credit score and makes you a financially stable borrower.
- Keep a Close Eye on Credit Utilisation
Credit utilisation is the ratio of your credit card balances to your credit limits. Maintaining a high credit utilisation can hurt your score. Keep your balances below 30% of your limits to improve your credit score. Low credit utilisation indicates you are not overly reliant on credit, a positive signal to lending institutions. Managing your credit utilisation effectively is crucial for maintaining a good credit score.
- Use Professional Services to Improve Your Credit Score
Consider using professional services that offer personalised strategies to boost your credit score. These services provide tailored advice and can help you reach your desired score. Professional services can offer insights and strategies you might not be aware of, making improving your credit score more efficient and effective.
Conclusion
Improving your CIBIL score from 600 to 750 requires consistent effort and smart financial habits. You can enhance your creditworthiness by paying off debts, maintaining timely payments, and managing credit wisely. A higher credit score opens doors to better financial opportunities, such as favourable loan terms and higher chances of getting a ₹ 5 Lakh loan approved. Stay disciplined, monitor your credit report regularly, and follow these strategies to achieve your credit goals in 2024. Reaching a higher credit score improves your financial health and provides greater access to financial products and services.
