CIBIL score is a three-digit summarised version of the credit history. In other words, it is a numerical representation of the applicant’s monthly financial transactions. To assess the borrower’s capacity to repay the loan on time, the lender examines their Credit score. Therefore, to get a car, property, or loan for unexpected expenses, having a good CIBIL score is necessary.
What Is A Good CIBIL Score?
A CIBIL score is provided to an applicant on a scale of 300 to 900. The following is what each Credit score signifies.
- Scores below 600: Low creditworthiness
- Scores between 600-649:Doubtful creditworthiness
- Scores between 650 – 699: Satisfactory creditworthiness
- Scores between 700-749: Good creditworthiness
- Scores between 750-900: Excellent creditworthiness
This assessment calculates each applicant’s likelihood of receiving a loan. Lower than 600 scores indicate low creditworthiness. With this Credit score, securing a loan is less likely. To increase the chances of getting a loan approved, applicants must aim for scores closer to 900. Scores between 700-900 are considered good Credit scores.
Why Is CIBIL Score Important?
CIBIL score is a reflection of your credit health. If you have good credit health, the lenders will trust you with their loans and offer your low-interest offers based on your score. Here are some other factors that contribute to its significance.
- Credit score is important to understand the past credit transactions and verify if there have been any discrepancies regarding the credit score.
- Since the lenders check the CIBIL score before providing a loan, it is essential to understand whether you have the eligibility for getting the loan or need to improve the score.
- A high score is necessary to negotiate lower interest rates with the financial institution.
- Getting high loan credits and long tenure is also essential to repay the loans.
- A good Credit score can give you faster approvals than an average score.
How To Maintain A Good CIBIL Score?
While having a good credit score is necessary, maintaining it is equally important. The CIBIL score is dynamic and subject to change if a creditor’s behaviour changes. Here’s how applicants can keep their CIBIL score high.
- Cancel the dormant credit cards.
- Ensure on-time payment of the loans. If loan payments are delayed, the score can get affected.
- Keep a proper track record of the transactions and fluctuations in the Credit score. If the score has decreased for certain reasons, you can follow these procedures to elevate the score.
- Do not make multiple loan applications together. If there are numerous ongoing loans, it might be stressful to clear all of them within a stipulated time.
- Choose a long repayment tenure to pay back the loan. A long repayment tenure means you can make pre-repayments if required.
- Make a Credit score login to check the credit utilisation ratio. Do not exhaust the credit limits. Try to use the credit upto 30%, because post this, the score can get impacted.
- Manage a credit mix of secured and unsecured loans to maintain the score.
- If you have co-signed the loan with a family member, monitor the EMIs.
- Do not make frequent enquiries as it might negatively affect the score.
The CIBIL score / Credit Score is crucial to the Indian financial system because many banks rely on it to approve and disburse loans. Despite how well you’ve prepared financially, emergencies might arise at any time, you can’t take emergencies for granted, necessitating the need for loan applications. Having a high CIBIL score is necessary to show credit behaviour to the banks and get the loan approved. You can make a CIBIL score login at a trustworthy website to monitor your score and make the above improvements for fast and quick loan approval.