If you are new to the credit industry and want to take a loan from banks but don’t have a CIBIL Score according to your loan amount requirement, Then read this article carefully.
Here’s everything you need to know about Credit Score, factors affecting your credit score & how to have a good Credit Score.
Let’s first start from the basics.
What is CIBIL & CIBIL Score ?
TransUnion CIBIL Limited is India’s first Credit Information Company, Also reffered to as Credit Bureau. They collect financial report of individuals and commercial units related to loans and credit card. These records are given to the banks and other lenders on a monthly basis and thus helps in developing the credit history of a person.
CIBIL assigns each and every individual with a 3 digit number based on there loan & credit card debt repayments. The score will vary according to the individual loan repayments capacity and keeping a check on whether a person have made any late payments or any EMI defaults.
Banks give Loan or credit based on this CIBIL Score or Credit Score.
CIBIL Score Range
Your Credit Score varies from the range of 300 – 900. This is one way of banks to check your loan eligibility. Let’s first know what these scores means :-
An Ideal Credit score is 750 which means that you are repaying your existing loan and Credit card payments on time.
Anything less than 700 or 750 is considered as a credit history which is less than 6 months and the index is lower and risk is higher.
NEVER BE CREDIT HUNGRY!
Lets just be clear on the fact that being credit hungry can put you in trouble. For example, there are two individual who wants to avail loan from bank. One has a CIBIL Score of 750 and the latter has a score of 950 who have got 3 – 4 credit card and various loans like home loan, car loan & personal loan. Bank will not sanction loan to this person because already he has too many debts to clear.
Thus, not only your CIBIL Score but several other factors will be taken into consideration before sanctioning the loan.
Factors affecting CIBIL Score
Payment history
Multiple credits
High credit hunger
Taking high amount of unsecured loans like Personal loan will reduce your credit score even if you are repaying them on time.
Never use all your credit at once. Decide a necessary amount and utilize the same. For example, use only 80% of your credited amount.
How Credit Score is calculated ?
With higher CIBIL Score you are likely to get loan from any prime lender at competitive interest rates. This CIBIL Score is calculated considering :-
Past performance
Credit type & duration
Amounts owed
Any new credit taken
How to Increase your Credibility ?
By now you must have concluded that loan will be sanctioned to you only when you’ll have a good credit score. Other criteria like the borrower’s age, Income, existing bank account holders, occupation are also important. However, you can improve your CIBIL score by the following means :-
Timely payments of credit card
Maintain a credit mix profile
No need to apply for too many credit cards
Get secured cards
Don’t worry if you don’t have a credit card!
Banks give secured cards which are credit cards against fixed deposits. Unlike normal credit card banks do not issue secured credit cards on the basis of your CIBIL Score. Hence, these cards can be used to improve your CIBIL.
You just have to pay a security deposit against which the bank will issue a secured credit card. You can simply pay your EMIs on time and in this way your credit score will show improvement after 6 months of issuing the secured credit card. Many banks offer these cards on different fixed deposit rates.
Remember that if you need loan 6 months later, you have to issue secured card now and start repaying them on time.
Eligibility
Any Indian citizen having a PAN card & other ID proofs like adhaar card, Voter ID, Driving License can apply for secured cards.
How to check your CIBIL Score ?
To check your CIBIL Score, You just need to fill in your personal details such as Name, Date of Birth, Gender, Residence address, Email ID, Mobile number and you can easily check your CIBIL Score anytime online at any credit agency.
Loans n Insurances 