A credit score reflects your credit payment history for banks and financial institutions and allows them to monitor your financial status. A good credit score helps lenders place their trust in lending large sums of money at reasonable rates of interest or provide better credit facilities. But at times, your CIBIL score may be negatively affected for a number of reasons, ranging from unpaid dues to banking errors. The score can then be fixed in the following ways.

• Get your current CIBIL score
  Before you can attempt to fix your credit score, it is necessary to find out your latest CIBIL rating. The Credit Information Bureau India Ltd. allows credit cardholders to apply and get a copy of their latest credit reports delivered within three working days.
• Check your reports
  The credit score is primarily affected by delays in payments and defaults; all this has a collective negative impact on the score. So, once you have identified the cause, it will be possible to eliminate negative unpaid balances and restructure your credit card use.
• Use credit cards carefully
  Most banking and financial institutions allow a decent credit limit for new applicants. This financial cushion can be tempting as your spending power is significantly increased. But spending unnecessarily will result in payment delays and defaults, affecting your credit score.
• Manage your credit limit
  Banks allow you to increase or decrease your credit limit. If the spending exceeds your monthly limit, it is better to approach the bank and ask for a credit increase. This is done to avoid overdrawing your credit limit as such transactions have a negative impact on your credit score. Similarly, you can ask banks to decrease your credit limit if you wish to stay within the spending budget and not make purchases that can potentially remain unpaid in the future. Managing your credit limit allows you to plan your expenses in advance and avoid overshooting your financial limits.
• Check your credit utilization
  CIBIL recommends keeping your credit purchase under 30-35% of your total credit limit. This means if your credit card has a monthly limit of 70,000, your spending should not exceed 21,000 to 25,000 per month. Maintaining this ratio will have a positive impact on your credit score as a low usage credit history indicates better cash flow management. It also instills more confidence among lenders as a healthy ratio indicates you do not necessarily rely on your credit card for purchases.
• Check for errors
  Banking errors can happen as most of the payment and debt collection systems are automated. So, it is not always your fault that the credit score reflected in the report is not as per expectations. If you spot errors in your banking statement, you must communicate the same to the bank and ask for a transaction reversal. Simultaneously, credit reporting agencies can track the changes made and make adjustments to reflect the correct credit score. Even spelling mistakes can link your CIBIL report to another person and reflect an incorrect score in the process.
• Avoid cosigning a joint loan
  Often, friends and family members might request you to cosign as a guarantor on a loan that they require. However, any defaults or unpaid dues on their part can also affect your CIBIL score, as you will be held liable for such transactions.