How to improve your CIBIL Score?

How CIBIL score is affected?

Many financial institutions such as banks have clear mandate from the RBI to check Credit Information Bureau (India) Limited (CIBIL) for evaluating all loan applications. Therefore, many times first time loan applicants (no CIBIL record!) or people with low scores are unable to avail of loans from banks / NBFCs.

So, how does CIBIL play a role in loan evaluation? Usually, lending is function of primarily two parameters –

  1.  Ability to pay
  2. Intent to pay

CIBIL report / score is used to understand ‘intent to pay’ based on analysis of historical financial data.

CIBIL keeps track of your loans and credit cards data as such information is submitted to CIBIL by member banks and credit institutions on a monthly basis.

This information is then used to create Credit Information Reports (CIR) and credit scores which are provided to financial institutions to help them evaluate loan applications.


low cibil score

Low CIBIL score

In case, you have missed or delayed few payments, you need to work on your CIBIL and build financial discipline to improve your credit worthiness.

How CIBIL Score can be improved?

For improving credit score rating in CIBIL one must avoid late payment or defaults in loans and credit card payments. If one missed payments on any of his existing loans over the last two years, credit score is likely to be negative as it indicates inability to serve existing obligations better.

There are few tips which can help you improve your CIBIL score.

Avoid high utilization of credit limits

Are you an avid user of credit card? Increased utilization of credit limits of your credit card may not affect credit score directly, however if your outstanding amount is continuously on higher side, then it can impact negatively on your credit score. It is always advised to use your credit card smartly and pay your all dues continuously and on time. As your loan burden reduces, your CIBIL score improves.

Avoid high current balances

  • The top and foremost thing is to minimize the usage of credit card i.e. keeping the credit utilization ratio to minimum.
  • Spend only what you can repay within the billing date.
  • High current balances pull down your score.
  • Also, it is advisable to keep one or two credit cards only.
  • Close all undesired credit cards by clearing the due.
  • Keep only those or that card where the repayment track record is good and is the oldest. This helps in building good credit history over a time period.

Pay not just the ‘Minimum Amount Due’

  • Many people feel to avoid any late fee charges or negative CIBIL reporting, paying minimum amount due is enough but in reality this attracts finance charges in every cycle.
  • You are only paying the interest on your amount due and rest of the bill remains as it is. It is better to always report inaccuracies if any or to pay off little debt in each cycle.

Pay EMIs on time

  • No excuse on delaying or defaulting on EMIs.
  • This is the foremost discipline which one could inculcate.
  • Always pay your EMIs on time.

Reduce number of unsecured loans:

like personal loans, clean bank overdrafts affect credit score negatively in CIBIL. It is better to avail home loan, auto loan and consumer loan which are secured by assets to improve credit score.
If there are many applications for loans from a borrower, it indicates his credit hungry behavior. Credit institutions discourage such borrowers.
To improve credit score rating in CIBIL one must avail minimum credit and secured loans instead of personal or unsecured loans.

Always remember a good CIBIL is a reflection of how disciplined you are with your spending and repayment habits. However, low CIBIL does not mean that all the avenues to borrow are closed. One can switch to modern medium of alternate financing called Peer to Peer Lending.

P2P Lending provides an alternate medium to borrow

There are several platforms such as i2ifunding, Milaap etc. which help the borrowers with weak credit profile to get loans at very competitive rates.

In India, online P2P lending is in its nascent stage, however has been growing very rapidly in past few months. Apart from CIBIL score, P2P lenders evaluate loan applications on multiple parameters such as past financial behavior, future financial prospects, demography, socio-economic factors and education etc.

Therefore, even if your CIBIL is weak or it is taking time to rebuild it, you can borrow at P2P platform.

It can help you get attractive interest rates with no prepayment penalties. You may use the loan amount for paying your credit card bills, consolidating debt, marriage, medical requirements or for any other contingencies.

Happy borrowing!!!!

How to get a personal loan despite a low CIBIL Score?


  • There are multiple factors that impact the decision of underwriting on a credit request. Score is one of them. As mentioned above a low score may at times lead to outright rejection but there may be instances where a loan still may get approved despite a low score. To know more you can also visit the link by clicking on my name

  • Sachin Pawar

    I have completed bajaj finance durable loan and after that my cibil score was 757. Then I again login for mobile on bajaj that time my cibil score was 758. I am using create card also and i am paying credit card bills on time and i ddon’t have bounce any emi on bajaj. But now my cibil score is showing 711. Plz tell me why this is happen.

    • editor

      Hi Sachin, There can be more than one reason. Pls check the following –
      1. If you are utilising your credit card near its credit limit
      2. Have you applied for multiple credit card or personal loans during the period
      3. Does any of your savings accounts requires minimum balance which you have not maintained
      4. Do you pay minimum amount due on your credit card instead of fully paying total amount due each month?

      Exact answer can only be given by looking at your CIBIL report which you can send us. However, these may be some tentative reasons if you have not defaulted (or any late payment) on any loan.

      i2i Team

  • Siddiq

    Hello ,
    I have done a typical mistake and I need your suggestion to rectify it.
    I’m Sid. I used to have a salary account with SBI back in 2011. I left my job on June 30,2011, and on July 1 I got my salary credit to my account. My salary was 10k, but my account was credited with 16k. By my ignorance or greed, I used those 6k without verifying its details. Now, after 5 years when I pulled out my cibil report, the same 6k is being reflected as restructured loan, which in return is hurting my cibil though all my credit cards & personal loans are paid on time. So, how to take this remark from cibil report and boost up my score? I’m ready to accept my mistake and repay. If I go ahead and repay them, will they take that restricted loan section from my report ?
    Appreciate your help and time.
    Thank you so much Sir/Madam. can I expect a solution for my case?

    • editor

      Hi Siddiq,

      We would suggest you to settle this with bank as this is a small amount and may make it difficult for you to get further loans at lower interest rates. Once you settle the account, bank will report the same to CIBIL at the end of month and your CIBIL score and report will start improving at once. However, pls note CIBIL considers last 3 year of financial behavior to calculate score and hence, there will be some impact of this issue though it will be lower with time.


    • Hi Siddiq,
      I would advise you to visit the SBI bank and speak to the branch manager. Let him/her know that you want to close this account. Do not use the word Settle as its a negative remark and will impact your score. Settlement means making payment partially instead of full payment. It shows an inability of making complete payment. Also, ask them once the account is paid off how many days will it take for them to close this account properly and remove the Restructured loan remark.

      The term Restructured loan means one does not have ample amount of money and has declared as bankrupt and is paying the lowest possible EMI for a longer tenure. It is utmost important for you to get this remark removed on a priority basis.

      IF you want to know more on terminology you can visit

  • ashalatha.k

    please call me

  • Is there any way to get FREE CIBIL Report? Paisabazaar is offering it free, is it true?

    Here is the link via which they are claiming:

    Please check and let me know.

    Puneet Sharma

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