Denied Loan Due To Low CIBIL Score? Here's How To Improve Your Credit Score Quickly

Low CIBIL Score In India: A CIBIL score (Credit Information Bureau (India) Limited score) is a three-digit number, ranging from 300 to 900, that represents an individual's creditworthiness.

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Low CIBIL Score In India: Getting denied for a loan can be a frustrating experience, especially when you need financial assistance. A low credit score is a common reason for loan or credit card rejection. Maintaining a good credit score is crucial for getting approvals from lenders.

Unfortunately, many people overlook this and apply for loans or credit cards without checking their credit scores, leading to unnecessary rejections. Lenders often view a low score as a risk, making it harder for you to access credit. However, being denied doesn’t mean the end of the road. 

Meanwhile, Congress MP Karti Chidambaram has raised the issue in the parliament. He stated that "Every time we go to a bank and tell them, 'I have paid my loan on time,' they respond, 'No, your CIBIL score is bad.' We don’t know how to approach CIBIL. For farmers, when they receive a subsidy from the government and use it to repay the loan, CIBIL does not update it. Similarly, if you settle with the ARC, CIBIL still does not update it. There needs to be greater transparency. The government has missed an opportunity to make life easier by reforming these systems instead of just tinkering around the edges."

CIBIL Score - set on fire @KartiPC pic.twitter.com/RuEBEsvmDj — With P.Chidambaram - Fan of P.Chidambaram (@wthPChidambaram) December 3, 2024

Moreover, it is important to note that CIBIL has an entire section dedicated to dispute resolution, available for both customers and businesses. The dispute resolution process is offered free of charge. There are ways to improve your credit score and increase your chances of loan approval in the future. 

CIBIL Score Breakdown: Where Do You Stand?

Usually, a credit score or CIBIL score ranges from 300 to 900. The upper limit shows that you have handled your credit well in the past whereas the lower limit shows that you cannot be trusted with credit. Most lenders approve loan applications of people with their credit scores higher than 750.

How To Identify Good, Fair And Bad Credit Score 

Your CIBIL score reflects your creditworthiness. Scores above 800 are excellent, 750-800 are good, 700-750 are fair, and 650-700 are poor. Excellent and good scores enhance loan approval chances, while fair scores may require improvement. Poor scores indicate financial struggles, leading to loan denials or higher interest rates. 

How To Improve Your CIBIL Score Quickly

Pay Bills on Time: Ensure timely payment of loans, EMIs, and credit card dues to avoid late payment penalties, which can hurt your score.

Reduce Credit Utilization: Aim to use less than 30% of your credit card limit to show responsible credit usage.

Clear Outstanding Debts: Pay off outstanding balances on loans or credit cards to improve your score.

Check Your CIBIL Report: Regularly monitor your CIBIL report for errors or discrepancies and get them corrected.

Avoid Multiple Credit Applications: Too many inquiries in a short period can negatively impact your score. Apply only when necessary.

Maintain a Healthy Credit Mix: A balanced mix of secured and unsecured credit can improve your score.

Keep Old Accounts Open: Length of credit history matters, so keep your older credit card accounts active.