6 Ways Mr. X Raised His CIBIL Score from 500 to 750

In India, more than 79% of loan approvals are granted to individuals with a credit score of 750 or above, according to CIBIL’s – one of the largest credit bureaus responsible for collecting and maintaining credit-related data of individuals and businesses - latest insights. Yet, a large segment of credit users—especially first-time borrowers or those who faced financial setbacks during COVID—find themselves stuck at the wrong end of the spectrum.

Take Mr. X, for instance. After losing his job in 2021, he defaulted on a couple of EMIs. Today, his credit score hovers around 500. He dreams of owning a car, maybe even a home someday, but each loan application ends in rejection. Why? Because banks see a CIBIL score of 500 as risky.

But here’s the good news: a low credit score is not a life sentence. With discipline and the right financial strategy, it's possible to climb from 500 to 750—and unlock a world of financial opportunities.

Mr. X’s Journey from 500 to 750: A Story of Financial Discipline

Step 1: Understanding Why the Score Dropped

Before Mr. X could fix his score, he had to identify what went wrong. His credit report revealed:

• Missed EMIs on a personal loan
• A high credit card utilisation rate (above 80%)
• Multiple loan inquiries within a short span

Step 2: Paying Off Overdue Balances

The first thing Mr. X did was clear all outstanding dues, starting with smaller balances. He then set up auto-debit for future EMIs to ensure timely payments.

Step 3: Reducing Credit Utilisation

He requested a credit limit increase on his card—but didn’t use it. Instead, he ensured his monthly usage stayed below 30% of the limit, which positively impacted his credit score.

Step 4: Avoiding New Credit Applications

Mr. X resisted the urge to apply for new loans or credit cards. Every hard inquiry drops your score slightly, and multiple inquiries can signal desperation to banks.

Step 5: Becoming an Add-On Cardholder

Mr. Y, a friend with a strong credit history, added Mr. X as an authorised user on his credit card. This move allowed Mr. X to benefit from Mr. Y’s good credit behaviour without taking on new debt himself.

Step 6: Monitoring Progress

Within 6 months, Mr. X’s score rose to 620. By the end of 12 months, it touched 710. In 18 months—with no missed payments, low utilisation, and no fresh loans—it hit 750.

Benefits of Having a Good CIBIL Score

Mr. X isn’t just happier—he’s financially empowered. Here’s why improving your credit score matters:

1. Better Loan Approval Rates

A high credit score—typically 750 or above—signals strong creditworthiness. Banks see you as a low-risk borrower, which significantly increases your chances of loan approval across products like home loans, bike loans, and business loans. Unlike those with poor scores who often face rejection or delays, you’re more likely to get faster approval with minimal documentation.

2. Lower Interest Rates

Banks and NBFCs often reward high-score individuals with preferential interest rates, especially on big-ticket loans. Over a 20-year tenure, this could mean substantial savings on interest payments.

3. Higher Credit Limits

If your credit history shows responsible usage, banks are more willing to increase your credit card or loan limits. This gives you better financial flexibility, especially during emergencies. Higher limits can also help maintain a low credit utilisation ratio, which in turn further improves your credit score.

4. Negotiation Power

A good credit score puts you in control when negotiating terms. You can ask for reduced interest rates, longer repayment periods, etc. Banks are more likely to accommodate your requests to retain a high-quality customer, subject to terms and conditions.

5. Quick and Seamless Approvals

When your CIBIL score is excellent, pre-approved loans and instant credit offers become the norm.