CIBIL stands for Credit Information Bureau India Limited. The very first thing that a lender checks before lending a loan is your CIBIL Transunion score, which ranges between 300 to 900. A higher CIBIL score enhances your chances of getting a loan. There are many benefits you get with a good credit score. While availing of personal loans you can also negotiate for a low rate of interest.
A Credit report includes:
- -> Your CIBIL Score
- -> Personal and contact information
- -> Employment and income information
- -> Number of accounts you have and also your Credit Card account
- -> Details of how many times the loan is taken and any amount overdue
- -> Inquiry information from all lenders you’ve applied for credit with
CIBIL Score is usually calculated based on several important factors by the credit bureau are mentioned below:
- Your past repayment report: When you default or make a late payment of your EMIs or equated monthly installments it negatively impacts your credit score. This is one of the major factors considered while calculating your CIBIL score.
- Credit Utilization ratio: Too much usage of credit shows that the borrower depends much on credit. An unwanted incident can push him towards defaulting on the loan. Below 30% credit utilization ratio is ordinarily preferred by creditors.
- Multiple Enquiries: Multiple inquiries for your CIBIL make lenders think of you as desperate and credit-hungry. Lenders generally don’t approve applications of such credit applications. Hence, only make a hard inquiry when you are sure of getting a loan. But, monitoring your credit score frequently befalls under soft inquiries and does not influence your credit score.
- The number of times you apply for a loan: Your CIBIL report keeps a record of how frequently you have applied for a loan in past and how many loans got approved. If many loans were rejected, it can negatively impact your score.
- Credit Mix: You should have a perfect balance of secured and unsecured debts to maintain a strong credit history. But this factor does not affect much while calculating your CIBIL.
A few clicks to fix your CIBIL mix
What should be your ideal Credit score?
Any score between 700 and 900 is generally considered an ideal credit score. Higher the credit score higher the chances of your loan application getting approved. You can avail of a personal loan, home loan, or car loan with a credit score above 700.
How can improve my CIBIL score?
Here are a few ways that will help you in improving your credit score:
- -> Set reminders for payments and pay your EMIs on time.
- -> Try to avoid taking too much debt at one time.
- -> Keep up a healthy mix of credit, and avoid taking too many unsecured loans.
- -> Constantly check your CIBIL report for inconsistencies and mistakes.
- -> Regularly keep checking your CIBIL Score.
Improving your CIBIL Score is not a one-day process. Patiently build and rebuild your credit score.
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- -> Must be a citizen of India
- -> Age must be above 21
- -> You must be self-employed or an employee of either a public sector company or a registered private limited firm
- -> Must earn at least Rs. 15,000 per month.
