How to improve CIBIL score and steps for CIBIL report rectification

Last Updated: Fri, Oct 04, 2019 12:50 hrs

Your CIBIL score is the measure of your creditworthiness, you must have heard this several times if you are even finely acquainted with the finance and lending industry. But, what you might have not heard of is that it plays a vital role in your loan application process. A good CIBIL score can increase your chances to get loan sanctioned at favourable interest rates.

If you have a low CIBIL then it is a reason of concern as it can ruin your chances to get your loan application sanctioned from lenders. Even if lenders agree to give you loan, it will be at a high rate of interest. Don't fret as such a situation is not permanent and can be rectified. But it will take some time – maybe six months, a year or more, depends on how bad is your score and how diligently you work to improve it.

To rectify the situation, i.e., to improve your CIBIL score, you need to follow a few practises, which are given as below:

1. Make payments full and timely

It has been observed by many that default by borrowers can greatly impact their CIBIL scores. Therefore, people with low CIBIL score must ensure that they pay their loan instalment and credit card bills full and on time. Those who often miss or delay their credit payments must set reminders on their mobile phones or set up automatic money transfer from their bank account.

2. Don't apply for a new line of credit unnecessarily

People who apply for every lucrative credit card that comes in the market must stop as it is perceived as a credit hungry behaviour by lenders. It also lowers your credit score as it increases the number of enquiries in your name. Applying for a new credit card or any other line of credit helps in building credit history and also credit score but not when it is done in excess.

3. Avoid hard enquiries as much as possible

A hard enquiry is when lenders enquire about your credit report from credit bureaus. Every time you apply for a loan or a credit card, lenders ask for your credit report and this reflects in your credit report and lowers your credit score. To avoid hard enquiries:

  • Avoid applying for a new line of credit until necessary.

  • Don't apply for a loan or credit card if not eligible.

  • Check your credit score before applying for a new line of credit.

  • Ask for your credit report from credit bureaus instead of lenders.

4. Don't exceed your credit utilization more than 30 percent

Your credit score is a proof of how well you have handled credit in the past. To improve your low credit score or to maintain it, ensure that you don't use more than 30 percent of the credit available on your credit card. Use your credit card every month but use it responsibly to improve your credit score and build strong credit history.

5. Don't close your old credit accounts

Closing your old credit accounts can also pull down your credit score by a few numbers. The age of your credit account also reflects your creditworthiness. An individual with a long and stable credit account creates a good impression in front of lenders as it shows that he/she has managed their credit account responsibly in the past. Therefore, people should not close their old accounts.

6. Avoid being a guarantor or co-signer

It is good to help your family, friends and relatives but not at the cost of your credit score. It often happens that people become a guarantor or co-signer for their dear ones to help them get a loan but doing so can have some serious consequences. By being a guarantor, you provide assurance to the concerned lender that if the borrower does not repay loan, you shall do so. If you too default, it will directly impact on your credit score. In case of co-signer, you directly borrow money from lenders along with other person. You are equally responsible for loan repayment as the primary borrower. Again, a miss or delay in loan repayment will reflect in your credit report as well. If the primary borrower defaults, you as the co-borrower will have to repay the entire loan amount.

7. Keep a tab on your credit score and report every month

Before you start making efforts to improve your CIBIL score check where you currently stand on the credit meter. Knowing your credit score beforehand will help you know how far you are from achieving excellent score. In addition to this, checking your credit report every month will help you identify and rectify clerical errors and fraudulent activities and other possible errors that might be pulling your credit score down.

If you identify mistakes in your credit report, you will need to rectify it as soon as possible. Going to a 'credit repair' company that asks for a large sum of money is not a wise move when you can raise a dispute online with CIBIL free of cost.

Steps for Online CIBIL Report Rectification

You can initiate a dispute online with CIBIL for inaccuracies, account ownership and duplication of information that reflect in your CIBIL report. The dispute resolution process of CIBIL is as follows:

  • If you have received your credit report from CIBIL, you can continue with the dispute resolution process, if not, you will need to first request for CIBIL report by filling out an online form at CIBIL website. The form will require a few details on personal information and proof of identity documents (mainly your PAN details, which must be linked to your Aadhaar else it will not be termed as valid).

  • Once you receive your CIBIL report, again check for inaccuracies. If the error still exists, take the next step.

  • If there are errors in your CIBIL CIR, login to myCIBIL.

  • Click the 'Raise a Dispute' tab.

  • Select the relevant sections which you want to dispute.

  • Select your account.

  • If the error is of ownership or duplicity of information, select 'Dispute Type'. If the error is of inaccuracy in information, enter a value for the disputed field.

  • Recheck your form for errors and submit.

Steps for Offline CIBIL Report Rectification

People who are not comfortable with online dispute resolution process can do it offline by following the process given as follows:

  • Visit the CIBIL's official website.

  • Download the Online Dispute Form.

  • Fill out the form carefully.

  • Post it to the following address:

    TransUnion CIBIL Limited,

    One Indiabulls Centre,

    Tower 2A, 19th Floor,

    Senapati Bapat Marg,

    Elphinstone Road,

    Mumbai - 400 013.

Total Time Taken for Dispute Resolution:

The dispute is taken up with the concerned lenders based on the type of dispute. If the dispute is legit and authorised by lenders, the corrections are made. The total turnaround time for despite resolution is of 30 days, which may change depending on the time the concerned credit source takes.