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You may have taken or want to take a loan from banks or other financial institutions to meet any financial emergencies. Just ensure that you have a good credit score. Lenders will verify your credit score or CIBIL™ score for assessing your past and potential creditworthiness, before granting you a loan.

What is a CIBIL™ score?

CIBIL™ is a leading credit bureau in India which generates a credit report and CIBIL™ score for individuals and businesses. CIBIL™ score is an important element of the overall lending process. It is a numeric synopsis of your credit report and ranges from 300-900.

Lenders verify your CIBIL™ score to evaluate your creditworthiness for understanding your credit history, financial prudence with respect to repayment and risk assessment before actually approving the loan/credit card.

A higher credit score ensures lenders of your financial credibility and is a sure gateway to get hassle-free loans/credit cards at better pricing alternatives like a low rate of interest, extended loan tenure or reduced EMIs. On the other hand, a low credit score could get your loan/credit card application rejected. be done to improve yours.

How does the CIBIL™ score get calculated?

Your CIBIL™ score is a reflection of your past credit behaviour and repayment patterns based on inputs provided by banks and other financial institutions. CIBIL™ calculates your credit score by considering key elements of your credit information like past loan repayment schedules, and patterns, outstanding amount, default on loan repayment etc. Weightage is then accorded pertaining to the fulfilment pattern of the various elements. Calculation of your credit score is a continuing process conducted by CIBIL™ to generate your credit report and assess your credit score.

Additional Reading: How is the CIBIL™ Score calculated?

What is the significance of a CIBIL™ report?

A CIBIL™ report refers to a comprehensive credit information report prepared by CIBIL™ based on your credit repayment history. Such credit information provided by banks and other financial institutions is collated and analyzed in a detailed manner, which is then considered by lenders to judge your creditworthiness to help them make sound lending decisions. CIBIL™ report is made up of

  • CIBIL™ score
  • Personal particulars like name, address, contact details etc.
  • Employment-related particulars like profession, business and income status 
  • Credit account information pertaining to loans/credit card details like outstanding balance, current balance, overall loan amount etc.
  • Lender information details where credit has been applied for

What reasons lead to a low credit score?

Common reasons leading to a low credit score could be:

  • Inaccurate personal details on account of error by the borrower or banks resulting in an incorrect update of CIBIL™ credit reports
  • Credit card/loan balance outstanding 
  • Applying for multiple loans or credit cards
  • Credit usage of 30% or more than the sanctioned credit limit increasing credit utilization
  • Late payment or default in payment of EMIs 

What is a good CIBIL™ Score?

CIBIL™ score is in the range between 300 - 900. A score of 700 and above is taken as an excellent credit score entailing sound financial behaviour on the part of the borrower. A credit score in the range between 550 – 700 is deemed as a medium score implying a slightly risky borrower behaviour. A score in the range between 300 – 549 shows poor credit behaviour leading to rejection of loan/credit card approvals.

Additional Reading: What Is A Good CIBIL™ Score

How can I improve my chances of getting a good CIBIL™ score?

If your CIBIL™ score is currently low, then by making certain changes in your financial behaviour, you can improve your chances of getting a good CIBIL™ score. This would ensure you timely loan/credit card approvals to meet your financial needs.

Pay loan/credit card outstanding on time

You should always ensure to repay your EMIs or credit card bills on time. Doing so entails financial prudence on your part leading to avoiding payment of late fees and improvement in your CIBIL™ score.

Limit credit utilization 

You should limit your credit usage to less than a 30% sanctioned credit card limit. Using more than 30% of the credit limit is deemed as high credit utilization indicating your need for constant debt which could adversely impact your CIBIL™ score. You should note that even if you do not use your credit card at all, that also leads to a lower CIBIL™ score. In order to have a higher CIBIL™ score, opt for a credit utilization ratio of lower than 30% of the overall credit limit sanctioned.

Limit multiple Credit Cards/Loans

Controlling your spending is one way to avoid going in for too much credit and multiple credit finances. You should apply for loans only when required and that too after checking your credit eligibility. Always on the lookout for multiple finance options leads lenders to form an impression that you are always in debt mode which could impact your CIBIL™ score negatively.

Maintain a Healthy mix of Secured/Unsecured Loans

Opt for a prudent mix of secured and unsecured loans for improving your credit portfolio. However, ensure that you do to have too many unsecured loans and you manage your repayments in a disciplined way. This would ensure improvement in your CIBIL™ score.

Track of Joint Account Outstanding

You may have made timely loan repayments. However, if you have a joint account, then ensure that all such joint holder/holders also make timely loan repayments. Otherwise, your CIBIL™ score gets negatively affected.

Regularly Track your CIBIL™ score

Keep regular track of your credit report and check for any errors. Get it rectified earlier to improve your CIBIL™ score.

Additional Reading: Smart Tips To Improve CIBIL™ Score

Know Your CIBIL™ Score FAQs

1. How do I check my CIBIL™ Score?

You can check your CIBIL™ score on their website.

  • Log into the official CIBIL™ website and click on know your score
  • Fill out the online form that requires details like your name, date of birth, address, ID proof, earlier loan history, and other relevant data.
  • After filling out the form and accepting the changes, you will be taken to the payment

CIBIL™ is one of the four credit bureaus in India that offers individuals their credit scores and credit report. The others are CRIF HighMark, Equifax, and Experian. You can check your credit score with any of them.

CIBIL ™ is one of the four credit bureaus in India which offer individuals their credit score and report. The others are CRIF HighMark, Equifax, Experian. You can check your credit score with any of them. Credit Mantri’s credit score is powered by Equifax. You can do a free credit score check and download your free credit report

2. Is 700 a good CIBIL™ score?

A CIBIL™ score between 700 and 900 is usually considered good and it gives confidence to the lender.

  • A CIBIL™ score between 700 and 749 is good and a CIBIL™ score between 750 to 900 is very high and excellent.

3. How Can I check my CIBIL™ score without the PAN card?

If you do not have a PAN Card, you can obtain the CIBIL™ score through the identity proof number in your passport, voter ID, or the driver’s license.

4. How to raise my CIBIL™ score from 600 to 750?

To get a higher credit/CIBIL ™ score, here are the top 9 guidelines:

  • Always pay your outstanding dues on time and in full.
  • Monitor your credit reports regularly
  • Keep a low credit card utilization ratio
  • Avoid the closure of older accounts from your report which are in good standing.
  • Avoid taking multiple loans and credit cards in short order.

5. What is an ideal CIBIL™ score?

A CIBIL™ score of 750 or above in your credit report is ideal. It will aid in the easy approval of personal loans and credit cards. However, if your CIBIL score is below 750, you may find it difficult to borrow funds from banks and other financial institutions. However, there are various other factors that impact the decision of lenders in giving you credit. Based on these, he finally decides whether you can give him the credit or not.

Disclaimer

The 4 credit bureaus- CIBIL™, Equifax, Experian, and CRIF highmark offer credit scores in India. The points mentioned above are true for credit scores from any bureau, not just CIBIL™.

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