When it comes to the quick approval of your instant personal loan application approval, the CIBIL score, inter alia, plays a critical role. It is a three-digit score that reflects your credit repayment history, experience with credit and current debt obligations.
Thus, the CIBIL score holds great sway in the lending process and influences the lender’s decision on whether to approve your personal loan application. If your credit score is low, you may not be able to take your application further on many loan apps in India.
While some lenders may offer you a loan even if your CIBIL score is low, the personal loan interest rates may be higher than the norm. This may be heavy on the pocket and cause stress during the repayment tenor. In addition, you may get a shorter repayment window and a lower loan amount from the lender to offset their risk.
To avoid all this and secure a competitive interest rate along with a higher loan amount, read on to learn how you can improve your CIBIL score and qualify for an instant personal loan easily.
Analyse Your Credit Report and Rectify Errors
If you wish to improve your credit score, the first thing to do is to check your credit report. Identify what may be pulling your CIBIL score down. In some cases, an inaccuracy in your credit report may be the key reason behind your low credit score. You can register a complaint of an error with TransUnion and expect its resolution in about 30 days[EW1] .
Clear Your Existing Debt/s
An outstanding debt reflects on your credit score and impacts the score negatively until you repay it. Hence, you must clear your outstanding dues to improve your CIBIL score quickly and qualify for quick personal loans offered by instant loan online apps.
Also, keep an eye on your debt-to-income ratio. A high ratio brings down your CIBIL score and vice versa. You can improve this not only by repaying existing loans but also by supplementing your earnings.
Make Timely Repayments
If you wish to increase and maintain your CIBIL score, paying your EMIs consistently on time is crucial. In addition, make sure to pay your credit card bills by the due date. Don’t forget to pay the full amount and not just the minimum due. These actions reflect responsible credit behaviour and can boost your credit score.
The best way to ensure timely repayment of EMIs is to set up an automatic transfer facility. Remember to keep sufficient funds in your transfer account to avoid bounce charges and a negative impact on your CIBIL score.
Keep Your Credit Utilisation at Bay
If you utilise too much credit from the limit available to you, it shows that you struggle to live in line with your income. This is called overutilisation of credit and hurts your CIBIL score, making it difficult for you to secure instant funding from most loan apps in India.
Remember this when it comes to your credit card limit and try not to use it up the limit every month. Instead, keep your credit utilisation ratio at 30% to 35%.
Borrow a Healthy Mix of Credit
The concept of building a credit score is simple: if you do not borrow credit, you will not have a credit score. So, in order to have a CIBIL score in the first place, you need to borrow credit. Note that if you only borrow and repay a single type of credit, it will not increase your credit score too much.
Instead, borrow a healthy mix of credit facilities to improve your credit score. This includes unsecured loans like personal and business loans as well as secured loans like gold loans, car loans and home loans.
Avoid Multiple Loan Enquiries Requiring Hard Checks Simultaneously
When you apply for a loan, lenders usually check your credit report and score. This is called a hard inquiry and causes a marginal dip in your CIBIL score. Hence, your credit score will be negatively impacted if you make multiple applications on various instant loan apps, as all lenders will check your score before approving your application. It is a much better strategy to do your research and apply only for one or two loans.
Be a Vigilant Co-Signor or Guarantor
If you have co-signed, guaranteed, or jointly held a loan account, you will be equally liable for default or delayed repayment. Thus, be careful before you agree to play the role of a co-signor, co-applicant or guarantor, and only go down this path if you are confident that your credit score will not be jeopardised.
With these tips, you can boost your CIBIL score and get speedy approval on your personal loan application. Remember, most lenders require you to have a credit score of more than 750. So, it is essential to check your CIBIL score and practice healthy credit habits before applying for an instant personal loan.
You can compare a range of personal loan deals from top lenders with ease and also check your CIBIL score for free on the Bajaj Markets App. Download this instant loan app today from Google Play or the App Store and get the funds you need in no time!