10 Proven Tips On How To Increase Your Credit Score In India

In India, there are around 10.9 crore active credit cards as of early 2025¹. Yet, despite their growing presence, many people still struggle to understand the basics, starting with one key question: What is a credit score, and how can you improve it?

Credit plays a vital role in fueling consumption, supporting infrastructure, managing inflation, and enabling financial inclusion. Easy access to formal credit also reduces dependence on unorganised lending and protects borrowers from predatory practices. Naturally, before offering credit, lenders rely on one crucial metric: your credit score.

What Is A Credit Score?

The numerical presentation regarding the creditworthiness of an individual is known as a credit score or cibil score. It mainly includes details regarding credit repayment behaviour. A good cibil score India indicates likelihood of paying loan back to the lender.

Credit Information Companies (CICs) issue this three-digit credit score. They have linked up with almost all the banks and data-sharing agencies. There are mainly four CICs (Credit bureaus) in India:

• Transunion CIBIL² (formerly CIBIL)
• Experian³
• CRIF High Mark⁴
• Equifax⁵

10 Actionable Tips To Increase Your Credit Score

Individuals need a good credit score to have better access to financial products and favourable borrowing conditions. The following are some strategies to help improve your creditworthiness over time.

1. Pay Bills & EMIs on Time

The timely repayment of credit cards and loan EMIs is important for the credit score. The missed loans will affect the credit score. It would be worthwhile to put bills on auto-debit to prevent future late or missed payments.  For instance, a reminder is easier, and auto-deduct would be preferred for EMIs. 

2. Keep Credit Utilization Below 30%

The ratio of used credit to total credit limits is called credit utilization. Lenders will interpret credit utilization greater than 30% as financial stress⁶. They will be less likely to lend money in the future due to high risk. Credit utilization can be managed by paying it off quickly between the statement and settlement dates.

3. Regularly Check Your Credit Report for Errors

Nobody wants payment writing errors on their credit report. Errors like incorrect entries or payments can negatively impact a credit score significantly. A year out of date is often normal, but individuals should check their score regularly. However, fixing those errors is the common formula for ‘how to improve cibil score immediately’ as it might increase the credit score fairly and quickly.

4. Avoid Multiple Loan/Credit Card Applications

When an individual applies for numerous loans or credit cards over a short period of time. It generates several hard inquiries on the credit report, which can lower the credit score. Lenders may consider this as someone desperately looking for credit, which can lessen the chances of being approved. It may be more beneficial to space out credit applications and just apply when necessary.

5. Maintain A Healthy Credit Mix

The more types of credit you have, like home loans, car loans, and credit cards, the better your credit accounts will reflect the consumption of different styles of loans. A credit mix has a lower percentage of the total score. However, individuals should not entirely rely on unsecured credit applications.

6. Do Not Close Old Credit Accounts

Older credit accounts are part of long-term borrowing behavior and positively support the length of credit history. Closing these accounts will lessen the average age of credit accounts and may also increase credit utilization values. If an individual continues to manage an older credit account successfully, it will be easy to borrow again in the future.

7. Build Credit History if You Are New to Credit

It is difficult for new borrowers to be recognized because they do not yet have a credit history. A good first step is to apply for a credit card or pay for a purchase on credit. These two will go on their record and help improve their reputation. Making repayments on time adds a strong record of payments and helps to get approved for loans again. 

8. Limit Co-Signed/Joint Loans

Co-signing or having joint loans makes both people responsible for the debt. No matter if the funds are used by one person or by both. Both people face harm to their credit when a co-signer cannot fulfill the borrower’s obligations. It leads to increased debt compared to their income, and they might face legal problems. 

9. Negotiate with Lenders For Settlements

Some individuals choose to negotiate a settlement if it becomes hard to repay debts. It lowers overall debt, although it appears as a settled account on record, but will count against your credit score for seven years. The best result is to reduce the effect on the scores by making smaller payments whenever possible. 

10. Monitor Your Score Regularly

Tracking the credit score regularly helps in noticing fraud attempts or other mistakes soon. These soft inquiries do not affect the credit score. People who are aware of their credit can decide when to apply and act quickly if something suspicious happens. Most major banks and agencies give the chance to check their customers’ credit scores and reports for free.

Why Credit Score Matters?

A credit score is a three-digit number that falls between 300 and 900. It measures an individual's credit potential. A high score means a low risk to the lender and increases the chance of obtaining a loan or credit card with better conditions. This score is calculated by credit agencies such as CIBIL, Experian, CRIF High Mark, and Equifax, based on the individual's credit history and repayment practices.

There are multiple brackets in the credit score range that can help in understanding how much credit score is good.

1. Excellent: A score between 750 and 900 is considered the best credit score range. Lenders typically approved loans easily with lower interest rates.

2. Good: A score in the range of 700 to 749 reflects a good and reliable credit history. Lenders approved for most credit, but not with the best interest rates.

3. Fair: A fair credit score of 650–699 suggests moderate reliability. Lenders approved loans with stricter terms and higher interest rates.

4. Poor: Lenders see scores lower than 650 as a much higher risk. They prefer to approve loans with a lot of terms and conditions at higher interest rates.  

Impact Of Credit Scores On Financial Opportunities

An individual’s credit score has a certain influence on their financial aspects:

1. Loan Approvals: A borrower can borrow more money with the best credit score for loan (700-900). The amount of the loan will decrease, and the process will take longer with a bad credit score.

2. Credit Cards: Better scores will lead to favorable approval rates for premium or reward cards. Whereas, lower scores will only be approved for basic cards.

3. Financial Help: A good credit score will lead to lower insurance premiums. A good credit score also provides leverage to negotiate better terms.

How Banks Decide If You Are Eligible For Credit

The CICs procure data regarding loans and other liabilities of an individual to decide the creditworthiness. They calculate the credit score of an individual by considering mainly factors such as:

• Length of credit history - Previous instances of procuring or ongoing credits. The longer history indicates better credit management.
• Number of defaults - It accounts for situations when the borrower could not repay the credit. The fewer defaults indicate credibility.
• The severity of defaults - The amount or percentage of credit left unpaid. The lower amount is favourable to satiate future credit needs.
• Repayment patterns - Periodic interval since the recent default with associated credit values. The older this default, the better the repayment pattern.
• Number of overdue accounts - The lower the number of accounts that are overdue, the better the indicator.
• Current outstanding - Ongoing loan of the individual. The lower current outstanding indicates better repayment and management.
• Presence of write-off - Number of loans the bank had to write off due to default. The lower number of write-offs indicates disciplined behaviour.
• A mix of credit - Different sources for credit, their tenure, and viability.
• Recent loan inquiries - Number of times an individual has needed to procure a loan recently, and is enquiring about the concerned entity. The lower number of inquiries shows lower or less frequent credit needs.
• Occupation, income, nature of work, address, and span of living in current addresses - It checks the current stability of an individual.

How To Know Your Credit Score?

As per the RBI, CICS should provide easy access to one Free Full Credit Report (FFCR), including credit score, once every calendar year (January-December) to all individuals whose credit history is available with the CIC. However, an increase in digital finance infrastructure has helped receive credit scores at a fingertip. An individual can check his/her credit score from the concerned bank or credit bureaus. Mostly, it is available for free at least once.

Higher credit rates help in getting better interest rates or increased credit limits. However, there is less knowledge about the credit score and its improvement. Usually, people face the question: how can you increase your credit score? 

Do not worry! Explore these simple and smart tips to learn the best ways to increase your credit score.

Impact Of Credit Scores

Credit payment discipline can help an individual to maintain a potential credit score. It helps to reduce the interest rate for a particular loan and allows a better flow of credit. So, when an individual has a good credit score, banks or financial institutions will be assured of the repayment capacity and behaviour.

Thus, a potential credit score can open the prospects for easy procurement of loans. A credit score above 700 is considered good by Experian, CIBIL, and CRIF Highmark. Equifax considers a credit score of about 670 good. Check for your CIBIL reports for mistakes and rectify them.

Conclusion

Credit procurement is accompanied by a credit check and the generation of a credit score, for an individual. This score is a reflection of creditworthiness. It helps in easy financing and lower interest rates. However, borrowers should have disciplined management of credit and its repayment to improve their credit score. 

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Frequently Asked Questions On How To Increase Credit Score

1. How to improve your credit score if you have no debt?

Credit score assessment consists of various factors such as length of credit history, credit mix, defaults, repayment pattern, occupation, income, etc., which help ascertain the creditworthiness of an individual. So, to improve the credit score, an individual should first procure credit to maintain timely repayment, have a good credit mix, make a disciplined plan, and avoid defaults and constant credit requirements. Such regulated and credible behaviour would help individuals increase their credit scores.

2. What is a good credit score?

A good credit score depends on credit information companies (CICs). In India, four CICs rate an individual from 300 to 900. Moreover, a credit score above 700 is considered good by Experian, CIBIL, and CRIF Highmark. Equifax considers a credit score of about 670 good. The higher the score, the better the credibility. An individual should manage their credit well to increase their credit score.

3. What is a bad credit score?

A bad credit score may impact the rate at which a person can procure credit and also the limit for it. In India, there are four CICs, and they rate an individual from 300 to 900. Moreover, a credit score above 700 is considered good by Experian, CIBIL, and CRIF Highmark. Equifax considers a credit score of about 670 good. A score near 300 is a danger sign. As per the good score by four CICs, one should score above 600 to have good credit availability.

4. How long does it take to improve a score?

A CIBIL score usually takes 3–6 months for any noticeable improvement. It will take 6–12 months for significant improvement, and depending on the repayment discipline, with lower utilization. 

5. Can I get a loan with a 600 credit score?

A 600 is a low score, so it can be difficult to approve a loan. Secured loans may still be approved with higher interest rates. Most NBFCs and lenders can approve a loan with some stricter terms.

6. What’s the difference between CIBIL and Experian?

CIBIL is an Indian-specific model with a 300–900 scoring and is the most used in India. Experian is based on the FICO model with a 300–850 scoring. However, the weights on some of the factors are a little different, and also may report information slightly.

References:

1. Financial Express, accessed from: https://www.financialexpress.com/market/stock-insights/indias-leading-pure-play-credit-card-company-rises-50-in-2025-can-it-sustain-this-comeback-rally/3872195/

2. CIBIL <https://www.cibil.com/faq/understand-your-credit-score-and-report>

3. Experian <https://www.experian.com/blogs/ask-experian/infographic-what-are-the-different-scoring-ranges/>

4. CRIF Highmark <https://www.crifhighmark.com/faqs>

5. Equifax <https://www.equifax.co.in/knowledge-center/>

6. Money Control, accessed from: https://www.moneycontrol.com/news/business/personal-finance/what-is-credit-utilisation-heres-how-it-affects-your-credit-score-12835524.html

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