What is CIBIL™ Score?
CIBIL™Score is the international credit rating system for bank loans. It is a means of determining a person’s creditworthiness. The CIBIL™ score utilizes a matrix of 13 information categories and a number of factors to score each consumer. The scores are then weighted for each category. The final score is between 300-900, with 700 and above considered good, and a score of 600 and below considered poor.
Your CIBIL™ Score is accessed by lenders before they approve your loan. It helps lenders evaluate your ability to repay and can be used to help you make more informed decisions during the loan application process.
A good CIBIL™ Score is vital to get the best possible deal. A low CIBIL™ Score means that you’re more likely to be rejected. With a CIBIL™ Score of 700 and more, you are offered a low rate and a high chance of getting approved. Getting the best interest rates and comfortable repayment terms is important for you to be able to pay back the loan without any late payments or defaults.
That is why we urge borrowers to improve your CIBIL™ score to get a better credit deal!
We are also sharing a few simple tips to help you achieve a higher CIBIL™Score:
1. Close any long-term loans or credit cards that are causing your low CIBIL™ score:
Multiple liabilities on your credit record have a negative impact on your credit score. You may choose to pay off tiny, long-term loans or credit card balances that are having a significant impact on your credit record. This will be reflected in your subsequent credit reports and is well worth it.
2. Check your CIBIL™ credit report on a regular basis:
Check your CIBIL™score at frequent periods to ensure that the report contains accurate information. If you discover any errors or omissions, you can have them corrected as soon as possible so that they do not have a negative impact on your CIBIL™score.
Also Read: How Can I Improve My CIBIL™ Score Quickly
3. Do not fall behind on payments:
Keep track of all your monthly payments and make sure they are made on time. Payment default, even if it is a genuine omission, has a negative impact on your score. To ensure that regular EMI payments are done on time, you can use options such as auto debit, standing instructions, or NEFT mandates. When making a cheque payment, make sure to send it in plenty of time before the due date to allow for the clearance period.
4. Limit your credit utilization:
One of the most effective techniques to improve your credit score is to refrain from using your credit card to its full limit. Limit your monthly credit card usage to no more than 30% of your credit limit. For example, if you have a credit limit of Rs. 1 lakh per month, make sure your monthly cost does not exceed Rs. 30,000. Using more than a third of your credit card limit indicates that you will struggle with budgeting and will be unable to save enough to settle your debts. This is what is causing your score to fall.
5. Avoid applying excessive loan/credit card applications in a short period of time:
When you receive a large number of inquiries in a short period of time, it is not looked upon favorably. What would a lender think if you completed a credit card inquiry, a personal loan inquiry, and a home loan inquiry all within a few months? It suggests that you are desperate for credit and are looking for multiple sources of credit. One approach to avoid a drop in your credit score is to avoid making a large number of new credit applications in a short period of time.
6. Keep an eye on your co-applicant's spending habits:
If you don't keep an eye on your co-spending applicant's habits, you can find yourself bearing the burden for no fault of your own. In such a case, if you are a joint loan application from someone else who has defaulted on payments, you would also suffer a drop in your CIBIL™ or credit score as stated in your report. The only way to avoid this is to guarantee that all cardholders pay their loans and credit cards on time and to avoid applying for joint credit terms.
7. Obtain an upgrade in your credit card available credit:
You can request an upgrade in your credit limit by contacting your card provider. Enhancing your credit limit will allow you to better maintain your credit-to-debt ratio without negatively impacting your credit score.
A poor CIBIL™ score isn't the end of the world. You may enhance your credit score by taking a few simple measures. Maintaining a healthy credit score requires careful credit management. Though you cannot improve your credit score overnight, following these actions will have a significant impact on your CIBIL™ score. A normal time to rebuild your credit score is 4-12 months. You only need patience, effort, and self-discipline to reach your credit objective.
FAQs How To Improve Your CIBIL™ Score For Better Credit Deals?
1:What is the typical range of CIBIL™ Score?
CIBIL™ score ranges from 300 to 900.
2:What is considered a good CIBIL™score and what would be poor?
A score of 700 and above is considered good and anything below 500 is considered bad.
3:Can I improve my credit score? How?
You can definitely improve your CIBIL™score by following a few simple steps; paying your EMIs on time; keeping your credit utilization ratio below 30%; avoiding unscrupulous borrowing beyond your means; not defaulting or missing payments; checking your credit score regularly for any errors and omissions.
4:Can I get a credit card with a credit score of 600?
Yes, there are credit card companies that would offer you a credit card or loan for a low CIBIL™ score. However, the interest rates and other credit terms would not be great.
5:How long will it take to improve my score from 600 to 800?
Improving your CIBIL™score is not an overnight task. It can take anywhere from 4-12 months to improve your CIBIL™Score. You need to improve your credit habits and financial management to improve your CIBIL™score gradually.