How long does it take to improve CIBIL score ?
When it comes to rebuilding your CIBIL score, the first question that may come to your mind is: How long will it take to improve CIBIL score? Actually, CIBIL score improvement is not an overnight process—it requires patience and self-discipline. However, once you achieve a good score, it automatically opens up more financial opportunities for you.
As a credit repair agency, we deal with thousands of customers. We observe that the time required to improve an individual’s CIBIL score varies from a few weeks to several months (typically 3–12 months). However, with a right approach, you can accelerate the whole process.
In this article, we have discussed the various reasons for a poor CIBIL score, the appropriate approach to handle them, and ultimately, how much time you need to rebuild your CIBIL score.
What is considered as a good CIBIL score?
If you are trying to improve CIBIL score, then you must know the benchmark, in order to get a better chance of qualifying for a loan according to your needs. Typically, a CIBIL score above 750 is considered as good enough, itmakes you eligible for numerous credit products. In fact, a CIBIL score of around 700 is also considered by the bankers in case of Secured Loans, like Home loans, Mortgage Loans, Secured Business Loans, etc.
Your credit score is evaluated on a scale between 300 to 900, depending on various parameters, such as your loan repayment history, credit utilization, recent credit enquiries, types of credit, and so on. A higher CIBIL score indicates your responsible credit behaviour and makes you more creditworthy in terms of securing a credit facility.
Importance of having a good CIBIL score:
- Risk Assessment by Lenders: A good CIBIL score is like your financial trust badge. It helps lenders assess how reliable you are when it comes to managing credit. A high score tells them you’re a low-risk borrower, which makes them more confident about lending to you.
- Quick Loan Approvals: With a good CIBIL score, the loan approval process becomes much faster. Since lenders see you as a trustworthy borrower, they’re likely to process your application more efficiently. It saves you the hassle of extra scrutiny and lengthy paperwork.
- Better Loan Terms: A strong score doesn’t just open doors to loans; it ensures you get the best deals. You’re more likely to secure loans at lower interest rates, higher limits, and flexible repayment tenure. Over time, this can save you a significant amount of money and reduce financial stress.
How long does it take to improve CIBIL score? (In different cases)
There is no fixed time for CIBIL score improvement, it depends on your current position and your goal credit score, where you want to achieve to fulfil your financial needs. However, by understanding the score-affecting factor, you can manage the total process more efficiently.
Case1: Presence of error in your CIBIL report
To improve CIBIL score, first, you should check your credit report carefully. Now, if you notice, your CIBIL score is affected due to some errors in your credit report, then rectifying those errors will help you to boost your credit report remarkably. In terms of errors, you may find unknown delinquent loan accounts/ incorrect loan status/incorrectly reported delayed payments, and many more.
In such scenario, immediately raise your concern to CIBIL authorities. Typically, it takes around 30 days to rectify the errors. Once rectified, your CIBIL score will be improved automatically. When you raise dispute in CIBIL, simultaneously communicate with the respective lender to speed up the process.
Case2: Pending dues on existing loan
Now, if you have genuinely defaulted on an existing loan account, it leads to Overdue, negative remarks, and delayed payment entries in your CIBIL report. Such delinquencies can significantly damage your CIBIL score.If you haven’t paid the pending due yet, then it’s important to contact the lender and make the payment immediately to improve CIBIL score.
Usually, lenders take 30-45 days to report the payment status on their customer CIBIL report. Once the payment is updated, your CIBIL score will be refreshed automatically. In such cases, you can also raise a dispute in CIBIL along with the payment proof. This can help accelerate the correction and improvement of your score.
Case3: Poor payment track record:
TransUnion CIBIL maintains an individual’s loan repayment history for the past 36 months. Any delays in payments, such as Days Past Due (DPD), Special Mention Account (SMA), Substandard (SUB), or Loss (LSS) reporting, can significantly impact your CIBIL score.
Now, if you have genuinely missed your loan EMIs, then it cannot be removed from your credit report as your CIBIL reflects your actual credit behaviour. However, its impact on your CIBIL score diminishes over time.
If you’ve recently delayed payments on your loan account, it’s crucial to regularize your EMIs immediately. By consistently making timely payments for 6 to 12 months, you can start to see a positive impact on your CIBIL score. Maintaining discipline in your repayments will help to rebuild your credit profile and improve CIBIL score over time.
Case4: High credit utilization ratio
Credit utilization refers to the percentage of available credit you are currently using on your active credit cards.
A significant portion of your credit score depends on the Credit Utilization Ratio (CUR).Ideally, it should be less than 30% to maintain a healthy CIBIL score. This demonstrates to lenders that you’re managing your credit well and not overly reliant on it.
Currently, if you have high usage on your credit card, take immediate steps to reduce it. Keep low utilization ratio consistently for 3–6 months to improveCIBIL score gradually.
Case5: Having multiple credit enquiries
When you apply for a loan or any credit facility, lenders access your credit report through their banking systems, which is recorded as a hard inquiry on your CIBIL report.
A large number of credit inquiries within a short period can significantly impact your CIBIL score. It indicates your credit-hungry behaviour and raises red flags for the lender.
TransUnion CIBIL keeps a record of an individual’s credit inquiries for the last 36 months. After the stipulated time, they will be removed from the CIBIL report automatically.
If you have recently made multiple loan inquiries, then avoid further applications at least for the next 3–6 months. Over time, the negative impact of these inquiries will reduce, and you may begin to see an improvement in your CIBIL score.
Case6: Unbalanced credit mixed
A considerable portion of your credit score is also influenced by the credit mix, which refers to the balance between secured and unsecured loans in your credit profile. We have seen, borrowers often take multiple small app-based unsecured personal loans, which hurt their credit score.
If the same thing happens to you and now you’re considering taking a secured loan to improve CIBIL score, it’s a good step—but be patient. Once you take the loan, lenders typically report it to credit bureaus within 30–40 days.
When the loan is reflected in your CIBIL report, you may see an immediate positive impact on your score. By consistently paying EMIs on time for at least 6–12 months, you build a strong credit history, which will improve CIBIL score gradually.
Case7: No credit history
If you have never used a credit facility or do not have any credit history in the last 36 months, your CIBIL score will either be -1 or marked as NH. In such cases, lenders may reject your loan application and advise you to build your credit score first.
In such a scenario, you can consider taking a credit-builder loan, such as a gold loan or a consumer loan. It typically takes 30-60 days, once the lender reports the loan to your CIBIL report, a credit score will be generated automatically. Over time, with regular and timely payments, your credit score will gradually improve.
