Consolidate Loans & Boost CIBIL Score: The 2025 Smart Loophole

Consolidate Loans & Boost CIBIL Score: The 2025 Smart Loophole

Ritesh had a decent income but a CIBIL score of 663 for months. This is because he had three active loans, high credit card usage, totalling to ₹4,40,000. He also had a couple of missed EMIs worth ₹15,000. To clear off his debts and increase his score, he opted for loan consolidation. 

Within 6 months, his score was 727. Let’s see how his loan profile transformation worked with the table below:
 

Generally, people take a small loan to increase their CIBIL score. Loan consolidation does the same if you are paying its EMI on time. ‘Ek teer se do nishane!’ Let’s see how this shortcut works further in this blog.

1. Reduce Credit Utilisation for a Quick CIBIL Boost

Priya had ₹75,000 credit card debt on a ₹1 lakh limit (75% utilisation). She took a ₹75,000 personal loan, cleared the card balance, and dropped utilisation to 0%.

High credit utilisation (over 30%) can negatively impact your scores. Consolidating that debt into a loan immediately lowers your utilisation and can improve your CIBIL score.

Read More – What Happens to Your Credit Score After Debt Consolidation?

For example, Sandeep is a 29-year-old sales rep. He had ₹90,000 credit card dues on a ₹1.2 lakh limit. His utilisation was 75%. So, he took a ₹90,000 personal loan at 12.5% interest for 12 months to clear the card. Here’s how everything worked out just fine:
 

2. Build Credit Mix with a Secured Loan

Aman was a college fresher. Initially, he had no credit score, so, got a credit card, took a small ₹50,000 personal loan and repaid it over six months. He took 3 more small debts over 2-3 years. He got a good credit mix and a credit score of 600. Not Bad!

Credit mix accounts for ~10% of your score. If you add a personal loan to already present debt (like cards), you show yourself as a financially disciplined person. Even secured loans like gold loans have a similar impact.

For example, Megha, a freelance writer, only had a credit card with 3 years of usage. She added a ₹60,000 secured personal loan against her FD and repaid over 9 months. Her CIBIL went from 621 to 683.

‘Kaise?’ Study the table given below.
 

3. Show Payment Discipline for Long-Term Score Gains

Rahul consolidated ₹2.5 lakh debt into a 24-month personal loan. He paid all EMIs on time, and his score rose from 710 to 765 within a year.

Payment history is the single largest factor (~35%) that impacts your CIBIL score. Regular, on-time EMIs from consolidation help build a strong repayment record. Mental health bhi khuch, credit health bhi!’ 

Also Read - How to Use a Personal Loan to Improve Your Credit Mix

For example, Imran had 4 EMIs, two cards and two loans totalling to ₹2.3 lakh. He took a 2-year personal loan at 11.75% to consolidate. He paid EMIs of ₹11,042 for 12 months on time, and his score jumped from 702 to 755.

Let’s compare both scenarios in the table given below.
 

Conclusion

‘Ab to samajh jao’ Your score determines your interest rates, which determines your EMIs. Now, there are multiple ways to increase CIBIL score, but debt consolidation is more like a shortcut. By reducing credit usage, building a credit mix, and paying one EMI on time, you rebuild trust with lenders. ‘Samajh gaye?’

Frequently Asked Questions

1. How to increase CIBIL score from 600 to 750 in 30 days?
Pay off credit card dues, reduce credit usage below 30%, become an authorised user, and clear overdue EMIs. 

2. Can I get a ₹50,000 loan with a 650 credit score?
Yes, through NBFCs or P2P lenders. You may get higher interest (~16–24%) or need a co-applicant. Some digital apps offer small loans if income and job stability are strong.

3. Is loan foreclosure good or bad?
It’s usually good. You save on future interest and improve your credit profile. Just check for foreclosure charges; some lenders may charge 2–4% on the remaining loan amount.

4. Is 750 a good CIBIL score?
Yes, it’s excellent. With a 750+ score, you qualify for top personal loans, low interest rates, and faster approvals from most Indian banks and NBFCs.

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LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?