The CIBIL score is a three-digit number between 300 and 900 that plays a decisive role in an individual getting approved or rejected for a loan. An excellent CIBIL score, i.e. anything in the range of 750 to 900 guarantees quick home loan approval. Further, such a CIBIL score also allows individuals to negotiate for a low home loan interest rate as well as other beneficial loan terms and conditions, such as higher loan sanction and a longer repayment tenor. Borrowers are therefore advised to check their CIBIL score before applying for a loan and move ahead with the home loan application process only if their CIBIL score is at least 750. What should an individual do if their CIBIL score is below 750? Here are a few tips that will help. 

5 Tips to Help You Apply to Improve Your CIBIL Score Before You Apply for a Home Loan 

1. Build a Clean Repayment History

An individual’s repayment history makes up almost 35% of their credit score. So, if you want to improve CIBIL score immediately, make sure you have a clean repayment history. Set up reminders to help you remember all the due dates. Clear all your loan EMIs on time. If you miss an EMI payment, clear it before the next due date and your CIBIL score won’t be affected much. 

2. Maintain a Low Credit Utilization Ratio 

Your credit utilization ratio makes up almost 30% of your credit history. So, if you want to improve your CIBIL score, maintain a low credit utilization ratio. In other words, never exhaust the limit on your credit cards and if you do, clear the entire amount due. Maintaining a low credit utilization ratio is important as it proves to lenders that the borrower is not excessively dependent on credit and is capable of making smart and wise decisions related to credit. 

3. Maintain a Healthy Mix of Secured and Unsecured Loans 

Secured loans are backed by collateral. Therefore, borrowers who avail of secured loans can avail of the loan at low-interest rates. Unsecured loans, on the other hand, are usually high-interest rate loans. Borrowers therefore usually prefer to take only secured loans. However, lenders prefer to lend money to borrowers who have a healthy mix of both secured and unsecured loans as it indicates a person’s ability to handle both low-interest rate and high-interest-rate loans. So, if you want to improve your CIBIL score, maintain a healthy mix of secured and unsecured loans.

4. Report If You See Any Errors 

Sometimes, a person’s credit score goes down due to wrong information passed on to credit information bureaus by financial institutions. Therefore, if you are trying to improve your CIBIL score, check your CIBIL report from time to time and if you see any errors, report them immediately. Rectifying errors takes time and therefore, one must never delay reporting these errors. 

5. Clear Your Debt 

When a lender feels that a borrower is excessively dependent on credit, they hesitate to lend money to the borrower. Therefore, to convince a lender of their repayment capacity, borrowers must try to maintain a low debt-to-income ratio. If you have too much debt, try to clear some of your loans. This will help you improve your CIBIL score.

Maintaining a high CIBIL score is crucial to enjoying a good loan deal. So, keep the above-mentioned pointers in mind if you wish to better your CIBIL score.

If you are having trouble to check your cibil score have a look at this Comprehensive Guide to Check Your CIBIL Score Using PAN Card