Is a 900 Credit Score Possible? - Tips for High CIBIL Scores

When it comes to managing your personal finances, maintaining a good credit or CIBIL score is paramount. It makes a huge difference in impacting your ability to secure a loan or get a credit card of your choice. A high credit score is considered a benchmark of good financial health, and financial organisations consider individuals with high credit scores as highly creditworthy.

If you are not financially savvy, and not sure what is a CIBIL score, what is the best CIBIL score, and how to achieve this score, then this guide is just for you. Read on!

What is a credit score?

A credit score is essentially a three-digit number, ranging from 300 to 900, that reflects your creditworthiness. This score is calculated by the credit bureaus on your credit behaviour and credit transactions.

There are many credit bureaus in India, and one of the most popular ones that all financial organisations rely on is CIBIL (Credit Information Bureau India Limited). The score they assign is called the CIBIL score. Typically, the credit bureaus consider a few critical factors like your repayment history, credit utilisation ratio, credit mix and duration of the credit.

From a financial organisation’s point of view, the higher your credit score, the better. It reflects your good financial behaviour and that you are responsible for handling your credit. Also, a high credit score allows you to get a loan easily and get credit at more favourable terms and conditions.

Also Read: How to Improve Your Credit Score to Qualify for a Business Loan

What is the best CIBIL score?

Now that you know what is CIBIL score, you may be wondering how much CIBIL score is good? Well, ideally, any score of more than 750 is considered a good CIBIL score. If you have a score of 750 or more, you can easily get the loan you desire and be in a better position to negotiate the repayment terms with the lender. And, if you have a score of more than 850 or the perfect score of 900, it would be considered an outstanding score.

Is it possible to have a CIBIL score of 900?

If you are wondering if it is even possible to have a maximum CIBIL score, i.e., reach the score of 900, then you are not alone. While very few people have a score of 900, it is not impossible to achieve that score. But it may require you to be highly disciplined with your finances.

It would require you to do the following things:

• Maintain an impeccable record of repaying all your dues, including credit card bills, loan EMIs (equated monthly instalments), etc, on time
• Keep your credit utilisation ratio to a minimum, i.e., less than 20%. The credit utilisation ratio is basically the extent of credit you avail against the maximum limit available to you.
• Having a long-standing credit history as well as having a good mix of both secured and unsecured credit in your portfolio.

If you maintain financial discipline over an extended period, your CIBIL score will increase gradually, and you may achieve a score of 900.

Also Read: The Ultimate Business Loan EMI Calculator

How to increase and maintain a high CIBIL score?

As mentioned earlier, maintaining a good credit score is an integral and important part of your personal finance management. You must keep a constant tab on your credit score and try to keep it over 700, especially if you are looking to apply for a loan in the near future.

But, if your score is poor, you need not be dejected or feel worried about getting your loan application getting rejected. Here are a few simple tips that you can use to improve and maintain a high credit score:

• Pay all your dues on time

  One of the simplest and most effective ways to improve your credit score is to get organised with your finances and pay all the dues on time, i.e., on or before the due date. You can set reminders for your payment or automate them by giving a standing instruction to the bank and asking them to debit the amount towards bills or EMI payments on a specific date of the month.

  
  

  This way, you will not miss a single payment and will avoid paying late payment fees. As you start paying off the dues consistently on time, your credit score will improve over time.

  
  

• Don’t avail too many credit

  As they say, “Too much is too much,” it is advisable to avoid taking too much debt at the same time, especially if you are trying to improve your CIBIL score. It is better to first repay your existing loan fully before applying for another.

  
  

  If you apply for too many loans at the same time, it will be a reflection of your credit-hungry behaviour. Every credit application will result in a hard inquiry into your credit profile, resulting in a lower credit score.

  
  

• Avoid being a guarantor

  When you are trying to improve your CIBIL score and want to apply for a loan in the future, it is better to avoid signing as a guarantor for anyone’s loan. It could be a risky move because if the primary borrower misses the payment or delays the EMI payment, it will adversely affect your credit score, too. Not to mention, if the primary borrower fails to repay the amount, you would have to bear the repayment burden, which, in turn, can affect your finances.

  
  

  Hence, agreeing to such an arrangement is better if you are certain about the borrower’s repayment capacity and financial stability.

  
  

• Keep your credit utilisation ratio low

  The credit utilisation ratio is the ratio of the credit limit you use against the maximum amount available. So, when trying to improve your CIBIL score and maintain it over 750, it is better to keep the credit utilisation ratio below 20%. This simple practice signals responsible credit behaviour.

  
  

• Choose longer loan tenure

  When you choose a longer repayment tenure for your loan, you can reduce the monthly repayment burden. This, in turn, allows you to easily meet the repayment obligation on time without compromising on your other financial goals and savings.

  
  

  Although choosing long repayment tenure means paying more interest over the loan tenure, it allows you to improve and maintain a good credit history and CIBIL score.

Conclusion

A credit score is an important aspect of personal finance management, especially if you are trying to avail a loan. It signifies your creditworthiness and lets you get the loan without any hassles. You can use the above tips to improve your credit score and even maintain a perfect score of 900.

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