How to Improve Your CIBIL Score Step-by-Step

Your CIBIL score plays a decisive role in loan approvals, interest rates, and credit card limits in India. If your score is below 750, you may face higher EMIs or even rejection. The good news is that improving your CIBIL score is possible with the right steps and discipline.

At Saarathi.ai, we have observed that borrowers who actively manage their credit profile can see meaningful improvement within 3 to 6 months. Whether you are planning to apply for a personal loan, home loan, or business loan, this step-by-step guide will help you strengthen your credit profile and improve approval chances.

What Is a CIBIL Score?

A CIBIL score is a three-digit number ranging from 300 to 900, issued by TransUnion CIBIL. It reflects your creditworthiness based on repayment history and credit behaviour.

Lenders regulated by the Reserve Bank of India rely heavily on this score while approving loans.

• 750+: Excellent

• 700-749: Good

• 650-699: Needs improvement

• Below 650: High risk

If your score is low, follow this structured plan.

Step 1: Check Your Credit Report Carefully

Before improving your score, understand why it is low.

Download your credit report from TransUnion CIBIL or other RBI-licensed bureaus and check:

• Incorrect outstanding balances

• Closed loans marked active

• Duplicate accounts

• Unknown loan enquiries

• EMI marked late incorrectly

At Saarathi.ai, we often see borrowers rejected due to reporting errors that can be fixed within 30 days.

Step 2: Clear Overdue Payments Immediately

Your payment history has the highest weightage in score calculation.

If you have:

• Missed EMIs

• Delayed credit card payments

• Outstanding penalties

Pay them immediately. Even one overdue EMI can reduce your score by 50 to 100 points.

Consistent repayment for the next 3 to 6 months can gradually rebuild your score.

Step 3: Reduce Credit Utilisation Below 30 Percent

Credit utilisation means how much of your credit card limit you are using.

For example:

• Credit limit: Rs 1 lakh

• Usage: Rs 80,000

• Utilisation: 80 percent

Experts recommend keeping it below 30 percent.

To reduce utilisation:

• Prepay before the billing cycle ends

• Request a higher credit limit

• Avoid large purchases temporarily

Financial reports in The Economic Times suggest rising unsecured credit usage in India, making utilisation monitoring even more important in 2026.

Step 4: Avoid Multiple Loan Applications

Each loan application triggers a hard enquiry.

Too many enquiries within a short period can signal financial stress.

Instead of applying randomly to multiple banks, compare personal loan offers on Saarathi.ai. Our AI-powered matching shows suitable lenders based on your profile, reducing unnecessary enquiries.

Step 5: Maintain a Healthy Credit Mix

A balanced mix of:

• Secured loans such as home loans

• Unsecured loans such as personal loans

improves your credit profile.

If you only have credit cards, adding a small secured loan and repaying it on time may strengthen your profile over time.

Step 6: Do Not Close Old Credit Cards

Your credit history length matters.

Closing your oldest credit card reduces your average credit age and may lower your score.

If the card has no annual fee, consider keeping it active with minimal usage.

Step 7: Convert Settlements Into Full Closures

If you previously settled a loan, it negatively affects your report.

Where possible:

• Pay the remaining amount

• Request the lender to update status as "Closed" instead of "Settled"

This improves lender perception significantly.

Step 8: Become an Authorised User Carefully

If a family member with strong credit adds you as an authorised user on their credit card, it may improve your score, provided their repayment history is clean.

Step 9: Use Auto-Debit and Payment Reminders

Set up:

• ECS mandates

• Auto-debit instructions

• SMS reminders

Consistency builds credibility.

Step 10: Monitor Your Score Every 3 Months

Regular monitoring helps you:

• Track improvements

• Spot errors early

• Avoid sudden drops

At Saarathi.ai, we recommend reviewing your credit profile before applying for major loans like a home loan or business expansion loan.

How Long Does It Take to Improve CIBIL Score?

Improvement depends on disciplined financial behaviour.

How Saarathi.ai Supports Your Credit Improvement Journey

Saarathi.ai connects borrowers with 110+ banks and NBFCs through an AI-powered marketplace.

With Saarathi.ai, you can:

• Ask eligibility questions via Saarathi AI expert

• Get personalised recommendations through Saarathi Recommendation Engine

• Track real-time offers in Saarathi Bazaar dashboard

• Experience a 100 percent paperless process

• Avoid unnecessary hard enquiries

Instead of hurting your score by repeated rejections, apply strategically with AI guidance.

Common Mistakes That Delay Score Improvement

• Ignoring small overdue amounts

• Paying only minimum due on credit cards

• Applying for new loans during recovery

• Closing old accounts

• Not checking credit report for errors

Avoiding these mistakes speeds up recovery.

FAQs

1. How many points can my CIBIL score increase in 3 months?

With disciplined repayment and lower utilisation, you may see a 20 to 50 point increase.

2. Is 650 a bad CIBIL score?

It is considered moderate risk. You may still get loans but at higher interest rates.

3. Can I improve my CIBIL score without taking a loan?

Yes. Managing credit cards responsibly and maintaining low utilisation helps.

4. Does paying the minimum due improve my score?

No. Paying only the minimum due may increase interest burden and keep utilisation high.

5. Should I take a small loan to improve my score?

Only if necessary and manageable. Focus on responsible repayment.

Conclusion

Improving your CIBIL score requires patience and discipline, but the rewards are significant:

• Faster loan approvals

• Lower interest rates

• Higher loan eligibility

• Better financial credibility

Start with checking your report, clear dues, reduce utilisation, and avoid unnecessary applications.

Discover personalized loan options on Saarathi.ai today and strengthen your credit journey with AI-powered insights.