What is a CIBIL score?
Your credit score is regulated by the Credit Information Bureau India Limited (CIBIL), which has direct control over your future contacts with lenders and financial institutions. A good credit score ensures that your loan or credit card application is approved quickly, but a bad credit score jeopardises your current and future chances. A lack of understanding is the primary reason we can’t always maintain a good credit score. We find ourselves in difficult situations because of our lack of awareness, particularly during difficult times. That’s why, at Bajaj Finserv, we’ve put together a list of five critical traits that can help you develop and maintain a solid financial history.
The CIBIL score aids lenders in making their decision regarding whether to provide you with a loan. Your credit history, history of loan repayment, debt-to-income ratio, kind of existing loans (secured or unsecured), and prior credit card usage are just a few of the variables that affect your CIBIL score. Find out more about the elements that influence your CIBIL score on Bajaj Finserv. We’ll now examine the several additional elements that contribute to your CIBIL score.
Why is a high CIBIL score so important?
Your score reflects the state of your credit. It paints an image for lenders of your ability to repay the loan amount.
- Understand your credit status:
By examining your score and report, you can determine where you stand and what you should focus on. Your CIBIL report contains a summary of all your credit transactions, both recent and past. You may spot and correct any anomalies that might have negatively impacted your score without your fault by routinely reading your report.
- Enables you to qualify for loans
A CIBIL score of 750 or higher is desirable for financial institutions and lending platforms. Therefore, it is crucial to establish a credit history and obtain a score as doing so increases your eligibility to apply for credit with favourable terms. It is challenging for lenders to determine your creditworthiness if you have no credit history and no credit score. The credit score range of a borrower’s credit is between 300 to 900. Your credit score indicates to a bank or lender whether you are a creditworthy borrower. Scores of 750 or higher are good. Your credit history, which includes the number of times you’ve borrowed money, the amount you borrowed, the kind of loans you’ve had, and other pertinent information, is what determines your credit score. Another crucial element is prompt payment of credit card bills and loan EMIs.
- What Benefits Come with a High CIBIL Score?
- Lower loan interest rates
- Cards that offer better rewards and perks
- Get pre-approved loans
- Loan terms that are longer
- Quicker credit application acceptance
- Power in negotiations
- Discount on processing fees for loans and other costs
- Increasing the credit card limit
The percentage of your credit limit that is being used influences your credit score as well. It’s recommended to utilise no more than 30 to 40 percent of your credit card’s monthly spending limit to keep your credit score strong. Your credit score may also be lowered by unsecured loans that are past due or by having numerous credit cards.
If you have a strong credit score, you might save money by getting loans with more forgiving terms and lower interest rates. However, a low credit score could result in your loan or credit card application is rejected or approved with unfavourable terms.
- How can my CIBIL score be raised quickly?
It’s not all bad news, either. Your credit score will rise because of these seven prudent decisions. However, you should consistently work on these skills and keep track of your credit card bills and personal loan EMIs. Some quick ways are shown below to improve your CIBIL score. Read the below pointers to get to know how.
- Make on-time EMI payments.
- Don’t take out several loans.
- Pay off your credit card debt as quickly as possible.
- Don’t use up all your credit.
- Select a longer repayment period.
- Keep track of old debt accounts.
- Establish a credit history.
- Examine your CIBIL score report for any inaccuracies.
- Don’t make any actions that are risky or surprising.
- Avoid having a shared credit card account.
It’s a good idea to start recording your payments and, if necessary, strengthen your financial discipline if you wish to apply for a loan to pay for future objectives like higher education, marriage, home ownership, vacation, and so on. Maintaining a solid CIBIL score is currently essential due to the rising economic values and expensive prices for everyday necessities. You can help yourself achieve the same goal by taking these ten steps.