In this article
Quick summary
- Pay every EMI and card bill on time. This matters more than anything else.
- Use less than a third of your card limit, and fix any mistake on your report.
- Apply for credit only when you need it: every application leaves a mark.
Two people apply for the same loan on the same day. Same salary, same bank. One is approved in two days at the lender’s best rate. The other gets a smaller offer at a higher rate, or a polite no. More often than not, the difference is one three-digit number: the credit score.
In India most people call it the CIBIL score, after TransUnion CIBIL, the oldest of the four credit bureaus. The good news is that it is not fixed. It is a summary of your habits, and habits can change. This guide explains what the score is made of, six things that actually raise it, and a few popular tricks that do nothing.
What the score is, and what lenders do with it
Your credit score is a number from 300 to 900. It is worked out from your credit report, which lists every loan and credit card in your name, how much you borrowed, and whether you paid on time. Banks and NBFCs look at it before they look at anything else, because it tells them in one glance how you have handled money that was not yours.
Every lender sets its own cut-offs, so treat the table below as a rule of thumb, not a promise.
| Score | How it is usually seen | What to expect |
|---|---|---|
| 750 to 900 | Strong | The best chance of approval, and the lender’s better rates |
| 700 to 749 | Good | Usually approved; the rate may be a little higher |
| 650 to 699 | Average | Some lenders decline or ask for a higher rate and more proof of income |
| Below 650 | Weak | Hard to get an offer from a bank; work on the score first |
What goes into the score
The bureaus do not publish exact formulas, but the main ingredients are well known.
- Payment history. Did you pay on time, every time? This is the biggest factor. One late EMI can stay on your report for years.
- How much of your limit you use. If your card limit is ₹1 lakh and you carry ₹80,000 on it, you look stretched, even if you pay the bill. Staying under about a third of the limit is a good habit.
- Age of your accounts. A card you have held for ten years speaks well of you. A brand-new one says little yet.
- Mix of credit. A home loan plus a card looks healthier than only unsecured loans and cards.
- Recent applications. Each full application leaves a hard enquiry on your report. Many in a short time can look like hunger for credit.
Six ways to raise your score
1. Pay on time, every time
Nothing else comes close. Set up auto-debit for at least the minimum amount due on every card and EMI, so a busy week or a missed SMS never costs you. If you often forget, move all due dates to the same week of the month so there is only one date to remember.
If you have already missed a payment, the fix is the same, only slower: pay on time from today, and the old mark loses weight as it ages. Clear any overdue amount first. A loan shown as overdue or written off hurts far more than one that was paid late and then caught up.
2. Keep card usage under a third of the limit
Banks report your balance to the bureaus once a month, usually around the statement date. If you spend ₹70,000 on a ₹1 lakh card and then pay it off after the statement, the bureau still sees ₹70,000 used. Pay part of the bill before the statement date, or ask for a higher limit, and the reported figure drops.
3. Read your report and fix mistakes
Under RBI rules, each bureau must give you one full report a year, free. You can ask all four, TransUnion CIBIL, Experian, Equifax and CRIF High Mark, and look at them one by one. Check that every account is yours, that closed loans show as closed, and that no payment is marked late when you paid on time.
If something is wrong, raise a dispute on the bureau’s website and tell the lender too. The bureau and the lender must sort it out within 30 days, and RBI’s rules require the bureau to compensate you for each day beyond that. Keep your proof: the bank statement, the closure letter, the no-dues certificate.
4. Stop applying everywhere
Every time you formally apply, the lender pulls your report. Five applications in a month look like desperation, even when you only wanted the best offer. Check your eligibility first, compare offers without a full application where you can, and apply to one or two lenders you actually fit.
5. Keep your old accounts, and mix your credit sensibly
Your oldest card is quietly helping you. Closing it shortens your history and lowers your total limit, so your usage on the other cards jumps. If it has an annual fee, ask the bank to move you to a free version instead of closing it.
A healthy mix, some secured credit like a home or car loan and some unsecured like a card, helps over time. But never take a loan you do not need just to improve the mix. The EMI costs more than the score gains.
6. Give it time
Lenders send updates to the bureaus every month or fortnight, so a change you make today can take a few weeks to show. Real improvement after a bad patch takes months of clean payments. The table below gives rough timelines. They are typical, not a promise.
| Your situation | What to do | Rough time |
|---|---|---|
| Cards used heavily | Pay down the balance, ask for a higher limit | One or two statement cycles |
| A mistake on the report | Raise a dispute with the bureau and the lender | Up to 30 days once raised |
| Missed payments in the past | Pay on time every month; clear any overdue amount | Six to twelve months or more |
| No credit history at all | Start with a small card or loan and repay it on time | Three to six months to get a first score |
What does not help
- “Credit repair” agents. Nobody can delete accurate negative information, and nobody can promise you a number. Fees paid to such agents are wasted.
- Checking your own score. This is a soft enquiry and does not lower it. Check as often as you like.
- Closing cards to look tidy. It usually lowers the score for the reasons above.
- Paying only the minimum due. It keeps you from a late mark, but the balance stays high and interest keeps growing.
- Taking a loan only for the score. You pay real interest for a small, slow gain.
A simple 90-day plan
- Week 1: request your free reports and read them line by line. Dispute any mistake.
- Week 2: set auto-debit on every card and EMI. Pay any overdue amount.
- Weeks 3 to 6: bring card balances under a third of each limit before the statement date.
- Weeks 7 to 12: make no new applications. Keep paying on time.
- Day 90: check your report again and note the change.
The bottom line
A strong score is built the dull way: pay on time, borrow less than you can, keep old accounts open, and apply only when you mean it. None of it needs a trick or a fee. If you are unsure where you stand, we can check which lenders suit your profile before you apply, so a rejection never lands on your report.
Questions readers ask
Most banks like 750 or above. Many NBFCs lend at lower scores, usually at a higher rate. Each lender has its own cut-off, so a score just under the line at one lender can be fine at another.
No. Checking your own score or report is a soft enquiry and has no effect. Only a lender’s check when you formally apply counts as a hard enquiry.
Two or three times a year is enough, and always a month or two before you plan to apply for a big loan. That leaves time to fix any mistake.
No. There are four credit bureaus: TransUnion CIBIL, Experian, Equifax and CRIF High Mark. Their scores can differ a little because each holds slightly different data. Lenders usually check CIBIL, but some use the others.
Paying a loan off in full on time is good for your record, and the closed account stays on your report as a positive. Closing a credit card is different: it can lower your score by raising the share of the remaining limit you use.
Sometimes, yes, from a lender that prices for risk, but at a higher rate. Before you apply, work out which lenders fit your profile. Each rejection adds a hard enquiry to your report.
