If you are aware that your CIBIL score is low and want to improve it as soon as possible, then first of all, you should pat your back for being responsible towards your credit rating. There are still many people out there who don't understand the importance of a high CIBIL score and end up facing challenges when they need a loan or a credit card.
Now, improving credit score is one thing, but is it possible to take a low score of 300 to as high as 800, and that too in a year? Let's find out.
Before we explore the viability of making a CIBIL score jump from 300 to 800, let's understand how the scoring system works in the first place.
Your CIBIL score is a numerical value that represents your creditworthiness which means that the higher is the score, the more you are "worthy" of obtaining credit. This is the reason why the banks approve loans easily for those whose score is high. However, you can check your score yourself by applying for your credit report (you get one free CIBIL report once every year).
The CIBIL score for every customer ranges from 300 to 900, with 900 being the highest achievable score. However, increasing the score isn't that easy as it's based on several factors including your repayment history, the age of credit history, income, and current loans, etc.
Most people are able to recover from a low CIBIL score no matter how bad their credit report is (unless there are some serious problems like loan defaulting). So, while crossing the 800th mark is an ambitious target, it's certainly achievable. But can you achieve that in 1 year? The answer is both yes and no.
As mentioned earlier, CIBIL score is based on many factors one of which is the age of credit history. So, even if you are making all the right decisions and using your credit responsibly, it's possible that you may achieve a score of 800 in nor one year but rather 2-2.5 years. However, there is a small possibility that it can be achieved in a year too if are both lucky and disciplined. Let's see what you have to do to make it possible:
It goes without saying that late payments of credit card bills and loan EMIs are the most common reason behind a low CIBIL score. However, what most people don't know that is that even a single late payment can affect your score. Thus, it's really important that you get your finances under control and preferably create a budget so that you are able to save enough every month to pay the bills and the EMIs.
This is easily one of the most effective strategies on the list. By increasing the credit variety, you can give your score a big boost in a short period. So, if your credit history is comprised of credit card payments, then you can apply for a small personal loan. Similarly, if your experience with credit management is the form of a car loan or education loan only, then you can get a credit card. The idea is to make your credit history more diverse and multi-layered. This has worked for countless people and there is no reason why it won’t work for you.
When was the last time you checked your free CIBIL report? If it's been a while, then it’s possible that your score is low because of mistakes in the report itself. For instance, if there are typos in your personal information (name, address, income, etc.) and errors in the repayment history that covers current debt, late payments, etc. then they can hurt your score. However, you can easily fix this problem by getting a copy of your report and letting your bank know about the errors that you notice. They can then contact CIBIL and have these corrected.
They may not necessarily get your score up to 800 in a year, but in the long run, they surely will. Good luck!