October 1, 2024 · 10 mins read
Santosh Kumar
One of the many things that we worry about in our lives is financial needs. We may want to purchase a new car, wish to study in that prestigious University, have to purchase that dream house of yours, maybe a handy credit card could be beneficial, etc. etc. Since everyone of us has those desires, but not everyone has that much money handy at the relevant time, why not take some loan to pursue our financial goals. Banks and similar financial institutes can lend you money to achieve your life goals.
So, how to improve credit score in 30 days? The procedure seems simple; banks can lend money with some associated interest rate at an agreed-upon interval of time. However, banks and financial institutes are very cautious about lending and often do a thorough background check about your spending habits and financial discipline. It is true that you need to borrow a desired amount of money from banks, but your banks or money lenders also have to ensure that you are capable of repaying that loan. If the financial institutions believe that you cannot pay them back, your loan application is not going to get a stamp of approval. Financial institutes have their way of making such decisions regarding loan approval. One of the crucial procedures is to know the CIBIL score of the applicants. Let's understand what a "CIBIL score" is, how it affects individuals and organizations, and how it helps banks make decisions on various financial applications.
The three-digit numerical score or CIBIL score reflects the credit behaviour of organizations or individuals. The CIBIL score varies between 300 to 900 and is a depiction of creditworthiness. The higher the CIBIL score, the higher the creditworthiness of the organization/individual. Financial institutions use this score to assess credit risk, which is exactly how the banks decide whether to approve or reject a loan application. The credit bureaus create CIRs and share the reports along with credit scores with financial institutions or banks; they do not make any decisions regarding loan applications.
A CIBIL score of 700 or above is considered good. Organizations or individuals with CIBIL Scores higher than 700 have higher chances of securing loans. Not only are loan applications more likely to be approved but there is also a chance they might get more favourable interest rates. So it is essential to know how to boost credit score in 30 days.
Read More: What is the Use of CIBIL Score?
Banks and financial institutions gather the CIRs or, more so, the CIBIL scores from the credit bureaus as and when required. However, it is crucial to understand how the CIBIL score might prove beneficial to us. Let's understand how a good CIBIL score benefits us.
1. Loan Approval: Whether for higher education, a dream home, business, or sometimes leisure, one needs to rely on banks or financial institutes for money. While banks might be glad to lend money at approved interest rates, they also need to ensure repayment of the borrowed amount alongside interest. They make this decision based on the CIBIL scores. A higher CIBIL score does wonders when it comes to approving loan applications.
2. Interest Rates: Getting a loan approved is not the only benefit associated with the CIBIL scores. Since a higher CIBIL score puts you under a less risky category, financial institutes or banks will be happy to oblige to offer better terms and lower interest rates. It requires simple maths to realize how a difference of even 0.5% can bring down the total payable amount.
3. Credit Limit: A higher CIBIL score is also beneficial with credit card applications. Similar to a loan application, a high CIBIL score will increase the chance for you to get a credit card, and at the same time, it can also result in higher credit limits. Higher credit limits on credit cards imply greater financial flexibility.
4. Employment Opportunities: Well, yeah, some employers might want to judge your integrity and credibility based on your CIBIL scores. That might be particularly true for positions involving financial responsibilities. A high CIBIL score might reflect your strengths in financial management and can thus be advantageous in job applications.
5. Insurance Premiums: Whether it's health insurance, life insurance, or term insurance, people are encouraged to buy one or more to secure their future. Insurance providers might also use credit scores to determine premium rates. So, not only age, occupation, or medical history but a good credit score will also aid in bringing down those premium rates to save money.
6. Rental Applications: Maybe you are not buying your dream home for now but just renting out a safe space. But again, landlords would also like to check your credit score before renting out their property. They need to ensure you pay the rent on time, and a high CIBIL score is just the thing to gain trust.
Read More:: Is 720 a Good CIBIL Score?
Credit history, especially related to various loans and credit cards, is collected and shared by the credit bureaus. It is advisable to check your CIBIL scores before applying for a new credit card, or maybe a loan application, or some miscellaneous stuff that requires the CIBIL scores. But what should one do if they find out that the CIBIL score is not up to the mark? Can it be improved in a short span of time? Or precisely, can one improve the CIBIL score in 30 days? Yeah, the answer is Yes!
The CIBIL score is influenced by various factors, like your payment history, credit utilization, length of the credit history, types of credits, and even recent inquiries. Since we understand how the CIBIL score works and how our payment habits directly influence the scores, let's go through some tips to improve your credit score in just 30 days.
The CRIs are based on the data collected by the credit bureaus. There is a chance of discrepancies in that data. So, it is a good idea to fetch your CIBIL report and check for any errors or discrepancies. As per the CIBIL website, one can download the CIBIL report once a year, free of charge. Not only are there errors, but one can also confirm if there are any late payments associated with your account or if there is a history of high credit utilization in the records.
1. Solving discrepancies: If there are any inaccuracies in the CIBIL report, one can initiate a dispute with CIBIL. You need to provide the necessary documents and evidence to support your claims. And no doubt, correcting these discrepancies can significantly improve your CIBIL score.
2. Settle pending payments: After verifying the report, if you realize that there are indeed some pending payments, you should rectify the situation as soon as possible. Start by listing down the unsettled loan amounts, create a payment strategy as per your financial situation, and if required, do not hesitate to call and negotiate the loan repayment terms with your banks or financial institutions.
Credit utilization is simply the percentage of utilization on your credit limit that you are using. It is a good idea to keep it as low as possible. While it is advisable not to go beyond 30%, at the same time, financial experts strongly recommend keeping the utilization below 10% to increase your credit scores. If credit utilization is an issue in your CIBIL report, then you can try to rectify the situation.
1. Pay existing balances: You should try to reduce the existing outstanding amounts on your credit cards.
2. Increase credit limit: If possible and you are eligible for it, you can ask your bank to increase the credit limits so that the credit utilization is automatically reduced.
3. Avoid new purchases: It is a good idea to hold off on using your credits for new purchases until you settle earlier charges and are able to maintain the utilization below 30%.
Even inquiries on your account can impact the CIBIL score. Every time you apply for a credit card, a loan, or anything else that results in an inquiry on your account, your CIBIL score can be lowered. Such inquiries are recorded and are termed hard inquiries. So, it seems you should temporarily hold onto your credit card applications. If you are applying for a loan, then just go through a pre-approval procedure that leads to a soft inquiry and does not affect the CIBIL score.
People trust old, faithful customers. So yeah, the length of your credit history matters. If you have older accounts, just keep them open, use those older credit cards, and shop occasionally for smaller purchases, and that will help boost your credit.
There is no need to shy away from seeking help from your close family members with a good credit history. You can just request that they add you as an authorized user on their credit card. While you need not bother about managing that account, you surely are going to improve your credit score.
While you are improving your CIBIL score, do not forget to keep an eye on the scoreboard. A regular check on your CIBIL score will help you make quick and right decisions to improve your score. At the same time, it will give you a sense of relief to see that the aforementioned tips are working well to improve your credits.
If you understand how your credit length, financial habits, and payment strategies affect your credit report and, hence, your CIBIL score, then improving your CIBIL score in just 30 days is an achievable goal. The rule of thumb is to always start with your credit report and plan what strategy will quickly help boost your CIBIL scores. Rectifying the existing errors is a must, but focus on managing loans and ensuring timely payments. Keep an eye on credit cards and see what methods help you decrease your credit utilization.
Read More:: How Students with No Income Can Get a Credit Card
What is the significance of the CIBIL score?
A credit score is a numerical score of individuals and organizations highlighting their financial discipline related to purchase history. RBI-authorized credit bureaus provide this score based on a detailed credit information report or CIR. A credit score provided by the credit bureau CIBIL is called a CIBIL score. CIBIL score ranges from 300 to 900. A higher CIBIL score, generally greater than 700, makes you creditworthy and increases your chances of loan approval.
How can I check my CIBIL score?
You can visit CIBIL's official website and check your CIBIL score against your account. CIBIL also provides you with a detailed credit information report free of charge once a year.
Can I improve my CIBIL score in 30 days?
Certain steps can help you improve your CIBIL score quickly. Start by checking if there are no discrepancies in the CIBIL report and trying to dispute them. Clearing off old debts, maintaining low credit card utilization, increasing credit card credits, etc., can also help you quickly improve your scores.
Do inquiries affect my CIBIL score?
Hard enquiries are stored and can reduce CIBIL scores. It is advisable to restrict your credit card applications or at least not be very frequent with them. You can go through a loan pre-approval procedure to hit a soft inquiry instead of a hard inquiry.
What should be the ideal credit utilization?
As a rule of thumb, one should keep the utilization below 30%. However, some financial experts believe that keeping the tab below 10% can be more beneficial for the CIBIL score.
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