Meaning of CIBIL

How to Improve CIBIL Score


                Credit Information Bureau (India) Limited (CIBIL) was founded in 2000. It is the first credit information company in India to collect and maintain the credit records of individuals and entities. CIBIL report of an individual gives a comprehensive picture as:

  • How many lenders (banks/ financial institutions) have given the loan
  • Type of loans taken, sanctioned amount, sanctioned date, EMI amount of each loan
  • Payment tracking for each loan
  • How many times has the individual applied for the loan
  • And many more

So, by just analyzing the CIBIL report, every bank/ financial institution got an idea of the credit history and repayment track of every borrower. If you apply for any loan today, the first and foremost step taken by the bank is to generate your CIBIL report. And on the basis of that report, the bank will decide whether to proceed with your file or not. So it is very important that everyone should know his/her CIBIL report and should know the CIBIL score.

This is most important for those who have taken out a loan and equally important for those who have not taken out a single loan in life.

In this article, I am going to discuss how to improve your credit score in your CIBIL report.

Major Reasons for Low Credit Score

There are two major reasons for having a low credit score in your CIBIL report.

Inaccurate Information

CIBIL collects information from the Bank and Financial Institution and if these lenders report inaccurate information about you then also your CIBIL score gets affected.

Defaults on the payment

A major reason for the low CIBIL score is if you default on the payment of your loan. reporting default on payment is due to various reasons such as

  • Genuine financial hardship
  • Missed payments on credit cards due to relocation internationally/ domestically
  • Missed payments on non-receipt of statement
  • Disputes with the lender on account of charges or annual feesDisputes with the lender on account of fraud

How to improve CIBIL Score

Buying Score

Earlier access to CIBIL scores was only available to banks and financial institutions, but now you can check your CIBIL scores individually. It comes with a small cost of Rs 550/-but it is not too much against checking your credit health. I suggest everyone should take his/her CIBIL report at least once. Because once you get the report then you will be able to know the exact reason for having a low credit score and rectify it.

Check Credit Report

After getting the CIBIL report, you should thoroughly check your report. Many times it has been seen that reason for low CIBIL score is due to the inaccurate data reported by the banks / financial institutions.  

The following are some examples of conditions that might lower down your CIBIL score

  • You have closed your old loan account but it was reported as an active account in CIBIL report.
  • Or you have not taken any loans from the bank but a loan has been reported under your PAN number.
  • You have given your details just as a reference check for any loan from your friend/ family but that loan has been reported as your loan or reported to you as Guarantor in that loan.
  • You have settled your old credit card or any loan dispute with the lender but it is still reported as an active loan account with default payments recorded by the bank /financial institution.

Timely Payment

Never ever delay the payments to your loan account. Always ensure to make the timely payment on or before the due date only. Whenever you make the payment of your EMI or dues of your credit card after the due date then the same is reported to CIBIL and reflected in your report showing ‘Due Past Days (DPD)’.

For example, if you have missed your credit card payment for the month of January 2020 and made the payment 30 days after the due date, then your CIBIL report will reflect a DPD of 30 in the month of January 2020 under the repayment track record of that particular credit card. Frequent DPD in your CIBIL report not only lowers down your scores but gives a bad impression of your credit history.

Never delay your loan repayments.


There are some people who make frequent inquiries from different banks about their eligibility for different loan types. But they don’t know the fact that every time you make an inquiry to a bank then each time bank will generate your CIBIL report and each such inquiry will be reported in your CIBIL report. So, if you have a large number of enquires in the past 1 to 6 months then also your CIBIL score will be affected badly.

So my suggestion is that don’t make frequent inquiries just to check the eligibility. If you really need financial help from a bank then you should remember that

  • Decide the purpose of loans like house renovation or business or marriage or education
  • Always apply for that loan which fulfills your purpose like housing loan for a house renovation, education loan for education, business loan for the working capital requirement.
  • Always apply your existing banker first means to that bank where you are maintaining your savings or current account. 

Don’t make frequent inquiries to various banks, just to check your eligibility for loan

Guarantee Given

Many times we casually give the guarantee to our friends/family or colleagues on the faith of our relationship. But we don’t know whether that person honestly paying his dues or EMI of that loan. If you give a guarantee to any loan then the bank also reports that loan under your pan card to CIBIL as guarantor. And if your friend, family, or colleagues are not paying off their debt then it will badly affect your CIBIL score as well.

Try to avoid giving guarantees to such loans whose repayment is not in your control.

Inadequate Credit History

If you have not taken any loan or credit card in your life, then you have an inadequate credit history. Under such conditions, your score might be -1 or 0 or 1. Having an inadequate credit history is also a negative impact on your CIBIL and your loan application might get rejected. So every fresher, after getting his or her first job should try to get at least a credit card even if you don’t required and start using it. This will help in building your credit history and repayment track.

Just follow these 6 simple steps and get a CIBIL score of 750+.

It is important to have a CIBIL record but it is not that hard to maintain a good CIBIL score.

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