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How to achieve that perfect CIBIL score

By Rajiv Raj
June 29, 2016 09:00 IST
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Is it possible to strive for just a little more and achieve the perfect CIBIL score? Of course it is, says Rajiv Raj!

If you are a perfectionist of sorts, you probably have everything under perfect control at home and at work. But have you ever wondered whether or not your CIBIL score is perfect?

If you are financially conscientious you are probably aware of the fact that anything above 750 is considered a satisfactory CIBIL score and opens up doors of lenders for you when you go seeking credit? But is it possible to strive for just a little more and achieve the perfect CIBIL score? Of course it is! All it will take is that extra bit of effort from your end.

What is the perfect CIBIL score?

While everything above an 800 is considered a very good CIBIL score, a score of 850 means you pretty much can access credit at any time you want and can negotiate with the lenders for a better rate of interest or better repayment terms. A lender will indeed be keen to get a borrower with a perfect CIBIL score because it indicates that you are a responsible user of credit and will not default on your repayments. Since the risk it will associate with you will be lower side, the benefits you may get may be slightly higher than those with a lower CIBIL score than yours.

How to achieve the perfect score?

No prizes for guessing that you achieve the perfect CIBIL score to make a conscious effort to improve it. Here are some tips to help you through it.

1. Automate your repayment schedule

If you already have a satisfactory CIBIL score, it is safe to assume that you already make timely repayments on your credit lines. To make things better, put an ECS instruction ahead of schedule to ensure that you never miss a payment date.

2. The length of your credit score

The length of your credit score can go a long way in influencing how good your CIBIL score gets. So if you are using multiple credit cards and are contemplating closing an old account, do not do so. Cut it up or lock it away for no further use by all means, but do not close it as it can add to the length of your account, thus swaying things in your favour, if you wish to increase your CIBIL score.

3. Keep your credit utilisation low

Your credit utilisation too has a great impact on your CIBIL score. Credit utilisation is the total amount of credit you use as against the total amount made available to you. In order to keep your CIBIL score high, keep your credit utilisation low. Ideally, your credit utilisation should be between 30-40 per cent.

The other way to keep your credit utilisation low is to ask your credit card issuer to increase your credit limit. However, do bear in mind that it is just for the betterment of your credit score and should not be used recklessly.

4. Do not apply any credit prior to a taking a big credit line

If you want to apply for a big credit line such as a home loan or an auto loan, do not apply for any other credit card or personal loan at least six months ahead of it. This will not only ding your CIBIL score, it may make you seem credit hungry and make the lender reconsider your credit profile.

Finally, do remember that attaining and maintaining a good CIBIL score is all about good financial health, so it is best not to overcomplicate things and just maintain good financial discipline.

Just as a good diet and regular exercise can help you maintain ideal body weight, so good financial habits translates into financial discipline that can lead you to a perfect CIBIL score of 850.

Photographs: Luigi Torreggiani/Creative Commons

The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.

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Rajiv Raj