How To Improve Your CIBIL Score To Acquire A Loan?
Are you looking to acquire a loan soon? Then, your credit score is the most important aspect that the lender will consider when evaluating your loan application. While many factors are taken into consideration when calculating the CIBIL credit score, the person’s loan repayment habits play a vital role. There are a lot more aspects to a CIBIL score. In this article, we will look at everything that you need to know about a CIBIL score.
What is a CIBIL score?
Your CIBIL score is a three-digit score of your credit history. This is derived from the information that is found in the ‘Accounts’ and ‘Enquiries’ sections of your Experian credit report. This includes (but is not restricted to) your credit card bill and loan accounts as well as their payment status and the outstanding amounts’ day past due. This credit score reflects your creditworthiness based on your repayment and borrowing history, which is shared by the lenders. This score ranges from 300 to 900. The better your credit score, the more likely you are to get a loan.
How is a CIBIL score calculated?
What you have just read is an overview of a CIBIL score. Below are four key factors that impact your CIBIL score.
- Payment history: Making late payments, such as paying your EMIs late, can negatively impact your credit score.
- Making multiple enquiries: Making multiple loans enquiries can negatively impact on your CIBIL score since it shows that your loan requirements will keep increasing even in the future.
- High credit utilization: When you have a high credit utilization, it indicates a rising debt over time and this may negatively impact your score.
- Credit mix: Having a between taking unsecured and secured loans is likely to positively impact your credit score
How can you build your CIBIL score?
Building your CIBIL score is essential if you want to take a loan in the future. So, to better plan for the future, it is better to build your credit score as soon as possible. To check credit score, you can download any credit score that will provide you with your credit score for free. The following are actions you can take in order to improve your credit score:
- Always make timely payments. If you default on your payments, the lender may be hesitant to approve your loan requests.
- Do not borrow more money than you require. Do not use too much credit, and control the amount of money you use.
- Keep a healthy mix of secured and unsecured loans. If you have too many unsecured loans, it could negatively impact your credit score.
- Do not excessively apply for credits, apply for credits in moderation.
- Regularly review your credit history to avoid any problems with your credit score. When you regularly review your credit score, you can spot any inaccuracies that would prevent you from getting a loan approval. If you do spot any inaccuracies, you can ask your lender to report the correction to CIBIL or report them on the CIBIL website
In conclusion, a good CIBIL score is crucial for securing loans with favorable terms. By maintaining timely payments, managing credit utilization, keeping a healthy loan mix, and avoiding excessive credit inquiries, you can improve and maintain a strong credit score for future financial opportunities. To keep a close watch on your credit score, download a CIBIL score app.