One of the most important prerequisites for taking on any kind of loan today, is your CIBIL score. Whether it is a home loan, a vehicle loan, a personal loan or any other kind of loan Applicant, banks always check one’s CIBIL scores. Also known as credit score; this is a document containing information about the borrower’s credit behaviour. Banks use potential borrowers’ credit scores to check whether or not they have been repaying their loans on time. Through the CIBIL scores they can check if a borrower has defaulted on any loan payments, missed paying any EMI and even get an idea regarding one’s financial conditions. If your credit scores are below 750 most lenders reject loan applications. So it is imperative to have good credit scores. Find out how to improve CIBIL score here. Repay your debts on time Whether it is your credit card bills or your loan EMIs, it is imperative that you repay your debts well in time. Missing out on repaying any outstanding debt can impact your credit rating. You especially need to be careful when it comes to paying loan EMIs because failure to do so, not only attracts penalties, but also affects your credit scores negatively. One easy way to pay your debt on time is to set reminders so that you don’t forget the loan repayment dates and never miss out on making timely payments. You can also set up automatic payments so that the loan amount is directly debited from your savings account every month. Don’t take on multiple loans A great way to improve CIBIL score is to ensure you do not take on multiple loans at the same time. Ensure that you’ve paid off your current loan before taking on another one. This prevents your credit scores from reducing. When you take on several loans at the same time, it shows your lender that you may not have sufficient funds to repay all of them. If you have only one loan to repay, the lender can feel confident in giving you the loan and your credit scores also remain unaffected. Try to maintain a healthy mix of credit Most people have to take on a variety of loans to fund the various life necessities. But when you take the loan, it is better to ensure that there is a healthy mix of secured and unsecured loans. While the home loan and car loan count for a secured loan, your credit card debt or personal loans are regarded as unsecured loans. It is necessary to maintain a balance since taking any loan in access can affect your credit rating. Don’t utilize your entire credit limit Another important point that pops up when we talk about how to improve credit score is credit limit utilization. One of the quickest and the easiest ways to improve credit scores is not utilizing your credit card to the extreme limit provided by lenders. Try to spend only 30% of the credit limit provided on your card per month. For instance, if you have a credit limit of ₹200,000 per month, you should try to restrict your monthly credit spends to only ₹60,000. When you exceed the 30% limit, your potential lender may get the idea that your spending habits are impulsive, which can also reduce your credit scores. Increase the credit limit If you demonstrate good credit repayment behaviour, your bank can reach out to you to increase the credit limit on your credit card. It is better not to turn down this increased credit limit. Increasing the credit limit doesn’t necessarily mean that you are going to increase your credit card spends. The idea is to have a higher credit limit but limiting your credit utilisation, and thereby improve CIBIL score. Doing this leaves a positive impact on your credit scores. Ensure that your credit report is error free While you may believe that your credit report is free of errors, there may be several unknown errors that may be reducing your credit score. For instance, you may have paid off your personal loan in full, but you may see that it is still unpaid owing to administrative errors. It is therefore important to check your credit score and ensure it is error-free before you apply for a loan so that your loan request is not rejected, thus further impacting your credit scores.