Today, banks and financial institutions can check your CIBIL Score within minutes.
The CIBIL Score shows how regularly you have paid your loan EMIs and credit card bills.
If your score is low, getting a loan can become difficult. Even if you get a loan, you might have to pay high-interest rates.
However, if your CIBIL Score is poor, there is no need to panic.
With the right steps and patience, you can improve it over time.
Let’s understand the problems caused by a bad CIBIL Score and how you can fix it.
Disadvantages of a Low CIBIL Score
Having a bad CIBIL Score can affect your financial future in many ways.
Here are the main problems you might face:
- Loan Rejection: You may not qualify for loans easily.
- Higher Interest Rates: If you do get a loan, you might have to pay much higher interest.
- Credit Card Approval Issues: You could struggle to get a new credit card.
A bad score impacts not just your present, but also your future opportunities with banks and lenders.
How Long Does It Take to Improve a Bad CIBIL Score?
Improving a poor CIBIL Score is not an overnight task.
Missing EMI payments or delaying credit card bill payments damages your score.
Even if you later clear your dues, the score does not immediately bounce back.
On average, it takes around 18 to 24 months to rebuild a good CIBIL Score.
During this period, it is very important to pay every EMI and bill on time.
Patience and discipline are key to repairing your score.
Impact of Loan Defaults
If you have defaulted on a loan, you cannot hide it from banks.
Your loan default will be clearly visible in your CIBIL Report.
When you apply for a new loan, banks will see this record, and it might become very difficult to get loan approval.
Effective Ways to Improve Your CIBIL Score
You can take several smart steps to boost your CIBIL Score:
- Pay All Bills on Time: Always pay credit card bills and EMIs before the due date.
- Clear Loan EMIs Promptly: Regular EMI payments help rebuild your credit history.
- Take a Loan Against FD: If needed, you can take a small loan against your Fixed Deposit (FD) to improve your score.
- Use Credit Cards Wisely: Spend within your credit limit and pay the full bill amount each month.
- Avoid Delays: Try not to leave any dues pending till the last date. Early payments show positive credit behavior.
What to Do After Paying Off a Loan?
Once you fully repay a loan, always collect a No Objection Certificate (NOC) from the bank.
Many people forget to take the NOC, and this causes the loan account to stay “open” in records, hurting their CIBIL Score.
After getting the NOC, also ensure your CIBIL Report is updated.
Similarly, if you close a credit card account, request an NOC for it too.
Conclusion
Maintaining a healthy CIBIL Score is essential if you want easy access to loans and credit cards in the future.
If your score has dropped, don’t lose hope.
With timely bill payments, proper loan management, and careful use of credit cards, you can gradually fix your CIBIL Score.
Also, remember to take the necessary steps after paying off any loan.
By managing your finances carefully and paying on time, you can keep your CIBIL Score strong and open the door to better financial opportunities.
