A good credit score isn’t just a number; it’s your ticket to better financial opportunities. Unlocking bigger loan limits can help your objectives, whether they include expanding your business, upgrading your vehicle, or purchasing a home. However, how is that possible?
- Bigger loan limits mean you can borrow more when needed-whether for a home, car, or emergency. It gives you more financial flexibility.
- Before granting loans, lenders assess your creditworthiness, or your ability to manage money. Bigger loan limits and quicker approvals are the results of having a credit score, which shows you’re trustworthy.
Understand How CIBIL Score Impacts Loan Limits
Your CIBIL score ranges from 300 to 900. The higher your score, the more trustworthy you appear to the lenders.
| Credit Score Range | Rating | Details |
| 750 and higher | Excellent | You have a better chance of receiving low interest rates and large loan limits. |
| 650 to 749 | Good | Loans are authorized, but the interest rate is a little high. |
| Below 650 | Risky | Loans may be denied or have unfavourable terms. |
A good score shows that you manage credit responsibly, while a low score indicates risk.
How to Improve CIBIL Score Immediately
Want to boost your score fast? Start with these steps:
- Pay off outstanding dues: Clear pending credit card bills or loan EMIs.
- Keep credit utilization below 30%: For example; if your credit limit is ₹1,00,000, try not to spend more than ₹30,000.
- Avoid multiple loan applications: Applying for many loans at once shows desperation, which can harm your score.
- Fix credit report errors: Mistakes on your credit report can unfairly bring down your score. Dispute and fix them immediately.
Boost Your CIBIL Score in 6 Months
Improving your score takes patience, but these habits can give you solid results over time:
- Pay EMIs on time: Consistency is key. Never miss due dates.
- Maintain a credit mix: Having both unsecured (like credit cards) and secured (like home loans) loans can balance your credit score.
- Keep old credit cards active: They increase your score by creating a longer credit history.
- Limit hard inquiries: A hard inquiry is made each time a lender investigates your credit in connection with the loan application. Too many of these can hurt your score.
Improve Your Credit Score for Better Loan Terms
A better score doesn’t just get you loans-it gets you better loan terms:
- Lower interest rates: Save thousands over the loan’s timeline
- Higher borrowing amounts: Fund bigger dreams with higher approved limits.
- Faster approvals: Less paperwork and quicker decisions.
Tips to Boost Your Loan Eligibility
Beyond raising your score, there are clever ways to boost your eligibility
- Increase income: Freelancing or starting a side business can help show more financial strength.
- Add a co-applicant: Their income and credit profile can improve your chances of approval.
- Opt for a longer tenure: It reduces your EMI, making repayment easier.
- Keep a low DTI (Debt-To-Income) ratio: It should be less than 40%. The smaller it is, the more eligible you are for the loan.
Common Mistakes That Hurt Your CIBIL Score
Avoid these pitfalls if you want to keep your score healthy:
- Ignoring small dues: Your credit score may suffer even from small unpaid bills.
- Closing old credit accounts: Don’t close old accounts unless required; Hey display long-term credit history.
- Not checking your credit report: To identify mistakes or frauds, check your credit report at least once over a few months.
Conclusion
- There are simple ways to raise your credit score. Your score can be immediately raised by taking quick steps like paying off debt and refraining from applying for new loans.
- You can get better interest rates and bigger loan limits by developing long-term habits like making your EMI payments on time and keeping your credit mix balanced.
FAQ
1. What is a Credit score?
Ans. It’s a figure that ranges from 300 to 900 that shows how good you are with credit.
2. Why is a good credit score important?
Ans. It helps you to get bigger loans at lower interest rates and faster approvals.
3. How long does it take to improve my Credit score?
Ans. It usually takes 3-6 months, if you get responsible with your credits.
4. What is a good Credit score?
Ans. A score above 750 is considered good.
5. Can a co-applicant help in getting a loan?
Ans. Yes, it increases the chances of getting a loan.
Also read,
- What is the Required Minimum CIBIL Score for a Credit Card?
- CIBIL Credit Score Zero (0) or Negative (-1)? What Does It Mean?
- Personal Loan for Cibil Score of 550
- Does making late payments affect the CIBIL score?
