A good CIBIL score becomes an integral deciding factor when applying for a personal loan . Having a high credit score of 750 or above boosts your chances of personal loan approval significantly at a considerably low-interest rate.
However, if your CIBIL score isn’t good, you can improve it in many ways. To learn how to increase your CIBIL score is to take the first step towards obtaining a personal loan. From paying off your debts on time to having a good credit mix, you can learn how to boost your credit score in numerous possible ways.

Here, at Piramal Finance, we allow you to improve your credit score with a personal loan. Not sure how to improve your credit score with a personal loan? Check this guide we prepared for you.

How To Improve Credit Scores with Personal Loans?

To learn how to improve your credit score fast with a personal loan, follow these tips curated by the experts at Piramal Finance:

Always pay your loan EMIs and credit card bills on time. Paying them in full and on time can significantly boost your credit score and represent you as a responsible borrower.
Keep track of your credit report using our free credit report checker. This will help you locate and address errors and potential fraudulent usage (if any). Rectifying such mistakes will boost your CIBIL score.
Avoid applying for loans from multiple loan providers as it increases the number of hard inquiries on your credit report, thus lowering your credit score.
Don’t go for debt settlement, as it can impact your credit score. Instead, try to repay all your outstanding debts completely. A settlement should only be an option when you’re financially broke.

What Is A CIBIL Score?

A CIBIL score is computed by one of the four credit bureaus in India – TransUnion CIBIL. Piramal Finance considers it a crucial factor while determining the loan applicants’ creditworthiness. It is a three-digit overview of your credit records and history that is derived after assessing your credit report. A CIBIL score typically ranges between 300 and 900. The higher the CIBIL score (750 or above), the faster you get approval.

Check Credit Report Free

At Piramal Finance, you can check your credit report for free with monthly updates. We allow our customers to check, monitor, track, analyze, and build their scores by giving them free access to their credit reports.

Our tailored credit advisory solutions enable customers to comprehend their credit reports for free and improve their credit scores accordingly. With Piramal Finance, get a comprehensive overview of your credit report, including vidya and analysis. So, boost your creditworthiness by improving your credit score!

What Factors Are Responsible for A Low Credit Score?

Missing Loan Installments

According to reports from Financial Express, a 30-day delay in your EMI repayment can reduce your credit score by 100 points. Thus, missing loan installments can be one of the major reasons behind a low CIBIL score.

Coming Too Close To The Limit On Credit Cards

If you come too close to your credit card limit and use almost 90% of it, your credit utilization ratio will fall. Such credit utilization will put you at high risk of defaulting and negatively impact your credit report.

Not Paying Credit Cards Back On Time

Not paying credit card bills back on time can adversely impact your credit report and, thus, lower your credit score. Delayed or missed payments show that you are careless and unresponsive about EMI repayments.

Not Paying Credit Cards In Full

Paying only the minimum amount due for your credit cards will get you trapped in a debt cycle. If you keep rolling the debt, significant interest will compound on your outstanding credit card balance. This will poorly reflect in your credit report and reduce your credit score.

Not Having Any Credit At All

Your credit score is also affected when you have several credit cards but no loans or credit. Your CIBIL score will get severely impacted if you have plenty of credit cards but not even one loan account.

Too Many Rejected Applications For Loans/Credit Cards

When applying for a personal loan or credit card, your credit report gets checked. This process is termed a hard inquiry. It’s most likely that many of the applications will get rejected, thus lowering your credit score.

Settling credit cards

Settlements are generally a less expensive way of paying the creditor an amount that will erase the credit by closing the credit card or loan account. However, having a settled status on a credit card or loan account has a significant negative impact on your credit score.

Benefits Of Taking A Personal Loan To Improve Your Credit Score

Clear Existing High-Interest Debts:

You may have to bear high penalty charges and high interest for any existing, past, or unpaid loan dues that you haven’t paid or have missed paying. In such a situation, taking a personal loan at a lower interest rate to pay off all existing debts can eliminate your financial burden while improving your credit score.

Consolidation of Debts:

A single personal loan from Piramal Finance is all you need to pay off and consolidate all your existing debts. Debt consolidation reduces the total interest you pay for all your debts. With only one personal loan to repay back, repayment on time in the form of EMIs in one place is the simplest thing for you. Thus, you won’t miss any repayments and eventually improve your credit score.