About the CIBIL Score:
In today's day and age, consumers turn to credit cards and loans to help them achieve their dreams and financial goals.
The CIBIL Score is one of the important factors and measures in getting this much-needed access to credit.
What is the CIBIL Score, though? And what are the factors that influence it?
What Is the CIBIL Score?
A CIBIL Score is a consumer's credit score.
Simply put, this is a three-digit numeric summary of a consumer's credit history and a reflection of the person's credit profile.
This is based on past credit behavior, such as borrowing and repayment habits as shared by banks and lenders with CIBIL on a regular basis (the details of which are featured in the consumer's CIBIL Report).
The Score is based on details found in the 'Accounts' and 'Enquiries' sections of the CIBIL Report, including (but not restricted to) loan accounts or credit cards, payment statuses, outstanding amounts and days past the due
date. Ranging from 300 to 900, the closer a CIBIL Score is to 900, the higher are the chances of the consumer's credit card or loan application getting approved.
A person's past behavior is taken as an indicator of his/her future actions, and, in line with that, the CIBIL Score showcases a consumer's credit-worthiness.
For example, when a person applies for a credit card or loan, one of the important factors that lenders check is the credit profile of the person as depicted by the CIBIL Score.
Understanding the CIBIL Score Ranges:
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CIBIL Score Range
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What Does It Mean for your credit?
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300-549
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- Poor CIBIL score
- Irregular repayment behavior
- Payment defaults
- High credit exposure
- High risk of turning a defaulter
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550-649
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- Fair CIBIL score
- Late payment of credit card bills/EMIs
- Multiple credit inquiries
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650-749
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- Good CIBIL score
- Responsible repayment behavior
- Long credit history
- Eligible to avail loan and credit card
- Might have to pay higher interest rate
- Low risk of turning a defaulter
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750-900
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- Excellent CIBIL score
- No defaulted payments
- Timely payment of bills
- No unpaid dues
- Responsible credit handling
- Cheaper interest rates
- High negotiation power
- Clean credit report
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How to Increase CIBIL Score?
Now that we know why the credit score is important, let us take a look into what you can do to increase your CIBIL score.
The need to increase CIBIL score will arise only when your credit score is in trouble and you are planning to apply for a new loan.
Following are the some key features to increases the CIBIL score:
1. Check Your Credit Report
2. Make Corrections to Errors
3. Note Your Credit Utilization Ratio
4. Don’t keep applying for credit if rejected
5. Keep the frequency of applications low
6. Pay your loans
7. Pay your credit cards on time
8. Don’t settle loans and credit cards
9. Keep the borrowing to a minimum
10. Get a mixed bag of credit
11. Watch out for joint applicants
12. Opt for Different Types of Credit
Why Your Credit Score is Important?
Making money in this world is not hard, provided you have one key ingredient – Money.
We live in times where we need money to make money, and we often spend precious moments of our lives thinking how to make this money.
With banks and lending agencies opening up in every town and city, one might think that getting money will become easier, but this might not always be the case.
Given the risk involved in lending, almost all financial organization rely on certain criteria to gauge the repayment capacity of an individual.
A credit score is perhaps the single biggest determinant when it comes to you availing a loan, which makes it critical for us to maintain our scores.
Not only does a good score improve our chances of getting a loan/credit, but also helps us get a better interest rate (if played smart).
While we give ourselves a makeover before approaching a lending organization, paying attention to our score and giving it a makeover is just as important.
Reason for Low CIBIL Score:
1. Outstanding Credit Card Balance
2. Too Many Loans/Credit Cards
3. High credit usage
4. Delay in repayments
Maintain your CIBIL Score:
1. Credit Utilization
2. Loan Enquiries
3. Repayments