CIBIL score is one of the most important factors for your to get a loan or any mode of credit. And mostly the most important reason your credit request can rejected as well. So what is your CIBIL score? How do you know what is the score? What does it comprise of? CIBIL is the Credit Information Bureau (India) Limited, they collect and maintain records for an individual pertaining to their credit, like loans and credit cards. Financial institutions and banks provide CIBIL with this information on a monthly basis.
So how does CIBIL use information to give you a score?
After financial institutions and banks provide CIBIL with the credit information, on both credit cards and loans pertaining to every individuals on a monthly basis. The Credit Information Bureau will then use this information and create Credit Information Reports (CIR) and this report will contain a score which is provided to financial lenders and banks. This report will contain your CIBIL score, the credit terms for every loan, the repayment method, and related transactions, having this report provides financial lenders and banks to look into your repayment records and will evaluate the process to provide you with a loan or not.
What most people don’t know about CIBIL
Many people aren’t aware that you need a credit score at least 750 points in order to be even considered to be eligible for a loan or credit cards from any financial lender. For every attempt of application and inquiry as well, gets recorded by CIBIL which has negative effect ends up lowering your score further. The main factors that contribute to your score is, making repayments in a timely manner, defaulting on payments lowers your score. This shows defaulting on payments you're unable to make payments on your current obligations and affects your score negatively. Having a mixture of credit is very important, having of secured and unsecured loans, this can be a mix of auto or home loans and credit cards and personal loans. Excessively applying for loans or trying for loans in various places also affects your score, this shows the Credit Information Bureau that your very credit hungry.
The best way to keep your CIBIL score high
The best way to keep your credit score high and at 750 point if not above is to use credit cautiously, making all payments on time.
- Avoid high credit - Have only 1 single credit card, making use of this and not have multiple cards and make yourself look credit hungry.
- Timely payments - Be extra cautious on your payments make them in an effective and timely manner, this will drastically improve your score even if it currently bad.
- Multiple application - Don’t look credit hungry and apply for loans from various banks and lending institutions each and every inquiry and loan request gets recorded by CIBIL and lowers your score.
- Don’t apply for new loans or credit cards - If you are aware that your CIBIL score which is low, immediately stop applying for a loan of any kind be it a credit card, personal loan, consumer loan etc. Applying for any loans will decrease your score further.
Read More on CIBIL
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- How Making Minimum Payments Can Affect Credit Score?
- Having a high CIBIL score can get you a lower rate of interest
- CIBIL score calculation
- Tips for good CIBIL Score
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