Many people apply for a loan only to hear from the bank that the application was not approved. Banks frequently withhold the precise reasons for rejections, but it is almost always due to a low or poor CIBIL score. So, in order to be able to get loans in a hassle-free manner, one is required to know the answers to questions such as “How to increase CIBIL score immediately?” and “How to maintain the CIBIL scores?” If you have a good CIBIL score you can quickly apply for instant loans through apps. This article’s discussion will centre on how to increase CIBIL score from 600 to 750 immediately.
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What Does CIBIL Score Mean?
Every borrower receives a three-digit number, ranging from 300 to 900, known as a CIBIL score from CIBIL (Credit Information Bureau (India) Limited). This score reflects the borrower’s creditworthiness which depends on a number of factors:
Record of payments made by the borrower
- The total amount owing on all loans held by the borrower across all loan accounts
- The tenure of the borrowings
- Enquiries made about your credit
- Secured loans as a percentage of unsecured loans
The Reserve Bank of India has authorized CIBIL to collect information on all the above-listed factors from member banks and financial institutions. CIBIL has a unique algorithm that calculates your score based on the information supplied by the banks. This score is in the range of 300 to 900 and is classified as follows.
- 300 to 549 – Poor
- 550 to 649 – Fair
- 650 to 749 – Good
- 750 to 900 – Excellent
Besides, there is one more category for people who do not have any borrowing history. Under such circumstances, the CIBIL score is -1 or NA/NH.
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9 Tips On How To Increase CIBIL Score From 600 To 750
There are several methods you may use to enhance your credit score. Here are 9 tips on how to increase CIBIL score from 600 to 750 immediately.
Track record of past repayments
Every month, CIBIL receives reports from all member banks and financial institutions detailing each borrower’s history of repayment. Therefore, even a single EMI payments default will show up on your CIBIL statement and lower your CIBIL score. Similarly, late payments, particularly recent ones, can lower your CIBIL scores. Besides, you will have to pay a penalty for payment delays on EMIs. These examples show the irregularity of your loan repayments.
Solution: As a result, paying your credit card bills and loan installments on time will raise your CIBIL score. You should set reminders for your payments and be disciplined with credit. Your settlement of outstanding debt can have a considerable impact on your credit score. Use services that let you automate bill payment so that you don’t have to worry about missing deadlines.
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Records of previous settlements, defaults, and write-offs
Your CIBIL score suffers as a result of previous loan settlements, compromises, and write-offs. Similar to this, defaults that result in legal actions and recovery proceedings lower your CIBIL scores. The worrying thing is that these entries are still present on the CIBIL report ten years after the incident. These situations show that you don’t intend to or are unable to repay the debt.
Solution: How to improve CIBIL score immediately? If there have been any defaults, it is preferable to fully amend the loan rather than opting for a compromise or settlement offer. We suggest getting in touch with the lender and making a thorough adjustment to the dues if there is a write-off. You won’t get any aid in this situation from partial payments or settlements.
Outstanding loan balances and age of credit
Your outstanding loan balances should ideally decrease each month if you don’t take out any new loans. Therefore, if you make your payments on time, the outstanding balances will also reduce. The CIBIL algorithm first takes notice of changes in your loan balance to calculate your score. Second, your CIBIL score improves with a longer credit history.
Solution: You can raise your CIBIL scores by making timely loan repayments. The balance rises if you take out more loans. The drawback of repaying past loans is that it may shorten your credit history, which could lower your CIBIL score. However, this element barely matters.
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The ratio of secured and unsecured loans
Depending on the collateral you offer as security for the loan, all loans can be divided into two types. Loans with enough collateral are considered secured loans. These loans include car, mortgage, and home loans, among others. Unsecured loans are ones with no underlying security. Personal loans, peer-to-peer lending, credit cards, etc. are some of them. Both of these categories are included in the CIBIL statement.
Solution: How to increase CIBIL score immediately? It is ideal to have more secured loans relative to unsecured loans. Therefore, having more secured loans is advantageous if you have a history of timely payback. However, a bigger balance on an unsecured loan is seen adversely. So it is best to keep unsecured debt, particularly credit card debt, at under 30% of the total credit limit. Furthermore, it can help raise your CIBIL score.
Consolidate loans and reduce monthly EMI burden:
In case you are struggling with too many loans and Credit Cards, consider consolidating these debts and opt for a smaller EMI. Apart from clearing card balance, you must also close some accounts. Repaying Credit Card balance and closing some loans can help you to increase CIBIL score from 600 to 750.
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Use credit prudently
Avoid taking on too much debt at one time. The number of loans you apply for, during a fixed time period should be minimal. To keep your credit score from crashing, repay one loan and then take another. If you opt for multiple loans at the same time, it will be evident that you are in an unforgiving cycle with insufficient funds. As a result, your credit score will decrease further.
Be patient
A credit score doesn’t improve overnight and it requires consistent effort to repair the credit report and improve it. Therefore, you need to be patient and continue to monitor your credit report, your different credit lines, spending pattern and ensure timely payment of a debt. Over time, it will help to boost your credit score and improve your creditworthiness. Increasing your CIBIL score is an uphill task but can be achieved with the help of planning and discipline.
Now you have the full information on how to increase CIBIL Score immediately from 600 to 750, use these tips to improve your CIBIL score and enjoy the various benefits associated with a higher score.
But what if you don’t even need to borrow? What if you could set up covering your expenses without incurring debt or being burdened by ever increasing interest liabilities? Sounds good? Yes, it is possible, just requires some advanced financial planning and wise decision-making.
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Chit Funds: A Desirable Option For Borrowers To Raise Money
Chit funds can help you in getting rid of the personal loan debt trap. Here’s a quick summary as how this is possible:
- Chit funds are a saving as well as borrowing financial instrument.
- For expenses that you are likely to incur in the short to medium term, you can contribute into an appropriate chit fund scheme for a tenure of 2-3 years. So when it’s time for the actual expense, your money is ready to use! No worries of debt or interest.
- In the meantime, if you are faced with a financial emergency, the chit fund gives you a quick liquidity option to tide over the situation.
- In a chit fund scheme, even if you take out the entire amount early, your monthly payments cover both the principal and interest. In this way, you will be debt free at the end of the tenure.
Saving money can help you avoid borrowing money from others in difficult times. Many people know the importance of saving but still they are unable to do so. Try to save from your salary and invest a little amount every month in chit funds so that you don’t have to face these problems related to debt and loans. Another thing, sometimes we buy things that we don’t need at the moment. When we run out of money, we regret it, so avoid unnecessary expenses as much as possible. The Money Club is a fast growing digital chit fund platform where you can save money. It is a transparent and secure platform that allows like-minded people across India to efficiently save, invest or borrow money through their smartphones.
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