As i mentioned in my previous posts that CIBIL Score is becoming increasingly important to avail any kind of debt. CIBIL Score less then 750 is fatal. Many readers requested me to write articles on How to improve CIBIL Score. This article is 1st in series on how to better your CIBIL Score.
If you are carrying a Credit Card, First and foremost discipline is to pay credit card dues on time. Many times credit card provider offer to increase Credit Limit on Credit Card and we refuse. Reason, we think that current limit is sufficient for current needs. This is disastrous for CIBIL Score.
Normally credit card provider offer to increase credit limit when you start exhausting 40%-50% of credit limit on monthly basis. They have selfish motive to increase your spending on credit card by increasing credit limit but indirectly they are helping you to improve your credit score. You must be thinking HOW? Let’s understand
If credit card provider is increasing credit limit on your credit card then they are showing more confidence in your repayment capability and indirectly certify that probability of default is minimum in your case to the extent of credit limit. Secondly if you are exhausting 40% of credit limit on monthly basis then by increasing credit limit you can bring down this % to 20%-25%. These 2 factors are taken positively by CIBIL while calculating your CIBIL Score i.e. Approved Credit Limit and % Spend of Total Credit Limit on Credit Card.
If you maintain healthy mix of Credit Limit and % spend of Credit limit then it will help to improve CIBIL Score fast. At the same time do remember that you should not hold more 2-3 credit cards. It shows hawkish behavior towards credit.
So next time when you receive call from your Credit Card provider to increase your credit limit or Card upgrade offer with enhanced credit limit…Happily accept the same. It will help you to improve your CIBIL Score.