Can you improve your CIBIL score in a month? MintGenie answers

Improving your CIBIL score, or any credit score for that matter, typically takes time and consistent financial behaviour. While it's challenging to make significant improvements in just one month, there are still some actions you can take that may positively impact your CIBIL score over time. Here are some steps you can consider:

Only borrow what you need and can afford to repay. Avoid maxing out your credit cards or taking on excessive debt. Responsible credit usage demonstrates financial discipline and can lead to a higher credit score over time.

Effective ways to improve your credit score:

Pay your credit bills: If you have pending credit card bills, you should pay them quickly. Ensure that you make all of your bill payments on time, including credit card bills, loan EMIs, utility bills, etc. Even one late payment can have a negative impact on your score.

Reduce credit utilisation: Aim to keep your credit card balances low relative to your credit limits. High credit utilisation—using a large percentage of your available credit—can negatively affect your score. Try to keep your credit utilisation below 30% to demonstrate responsible credit management.

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Avoid taking new loan: If you are looking to improve your credit score, you should refrain from opening new credit account. Because every time you apply for new credit, whether it’s a credit card, loan, or line of credit, the lender may perform a hard inquiry on your credit report. 

Pay off debts: If you have any outstanding debts, pay them as soon as possible. Lowering your overall debt burden can improve your credit utilisation ratio and demonstrate responsible debt management.

Diversify your credit mix: Having a healthy mix of credit accounts, such as credit cards, installment loans, and mortgages, can positively impact your credit score. If you only have one type of credit account, consider diversifying by responsibly adding another type of credit.

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While these steps may or may not lead to immediate improvement in your CIBIL score within a month, they can definitely lay the foundation for long-term credit health. It is vital to remember that building good credit requires patience, discipline and consistent financial habits.

Frequently Asked Questions:

How can you improve the credit score?

You can improve your credit score by making timely payments, reducing outstanding debt, and maintaining a healthy credit utilisation ratio (CUR).

Does being a guarantor impact your debt burden?

Being a guarantor doesn't raise the debt burden but is seen as a potential debt. However, the banks may consider the guaranteed amount while determining borrower's creditworthiness.

What is credit counselling?

If you are struggling to manage debt, you may consider seeking assistance from a reputable credit counselling agency. They can give guidance on debt management strategies and negotiate with creditors on your behalf.

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Can there be mistakes in credit reports?

It is not uncommon to spot mistakes on credit reports. So, regularly checking your credit score enables you to spot any errors, such as inaccuracies in personal information or incorrect reporting of accounts or payments.

Does applying for new loan impact the credit score?

Each time you apply for credit, it leads to a hard inquiry that can lower your credit score for the time being. So, it is recommended to limit new credit applications, particularly if you’re planning to take out a significant loan soon.