In case you apply for a loan or credit, the CIBIL score is an important factor that is considered by lenders. Lenders provide loans at low interest rates if your CIBIL score is high. On the other hand, interest rates on loans are high if your credit score is low.
The CIBIL score determines an individual’s creditworthiness. However, loans are not provided immediately even if your CIBIL score is high. Several factors such as your income and financial portfolio will also be considered before the lender provides a loan or credit card.
Different CIBIL Score Ranges
Your CIBIL score will range between 300 and 900. The higher the score the better your creditworthiness is. The different CIBIL score ranges are mentioned below:
- Below 500
In case your CIBIL score is below 500, the loan or credit card application in most cases will be rejected. A score below 500 is likely because of several default payments. It is possible to improve your credit score, however, it will take some time.
- Between 500 and 600
In case you fall within this bracket, it may be very difficult for you to avail a loan. You will need to maintain the right credit mix, pay your Equated Monthly Instalments (EMIs) on time, and pay your credit bills on time to improve the CIBIL score.
- Between 600 and 700
If your CIBIL score ranges between 600 and 700, lenders may provide a loan at high interest rates. It may also be difficult for you to avail a loan with better terms. A CIBIL score in this range indicates that there has been a default or delay in payments in the past.
- Between 700 and 900
If the CIBIL score falls between 700 and 900, your creditworthiness is high and loans may be provided at low interest rates. A credit score between this range also indicates that bills are paid on time and you are financially responsible.
Ways to Improve the CIBIL Score
The different methods by which you can improve the CIBIL score are mentioned below:
- Grow your credit history slowly.
- Check your credit history on a regular basis every year.
- Apply for a loan or credit based on your limit.
- Maintain a good credit mix.
- All dues and EMIs must be paid on time.
It is important that you have a good CIBIL score when you apply for a loan or credit card. Your application may be rejected or the interest rates will be high in case you apply for a loan with a low credit score. Any rejections will lower your credit score even further. You must pay all the dues on time and have the right credit mix to improve your credit score.