What makes your CIBIL score?
CIBIL maintains a person’s credit history w.r.t. loans and/or Credit cards being used and/or used in past by a person.
Credit history mainly refers to the amount of loan/Credit card limit, time taken to repay, whether instalments paid timely, whether loan/Credit card closed normally or under settlement etc.
A good credit history translates into a better CIBIL score. CIBIL score ranges from 300 to 900. A score less than 750 is seen as negative by financial institutions wherein they normally decline a person’s loan/Credit card application or charge a high rate of interest due to high risk associated with a person because a score less than 750 may mean that a person did not pay the installments timely and/or settled a due by paying an amount lower than what was actually due and/or applied for loan/Credit card in many financial institutions etc.
When one applies for a loan/Credit card then probably the first thing which a financial institution refers is a person’s CIBIL score, if the CIBIL score is more than 750 then there are approximately 80% chances that a person’s loan/Credit card application will get approved subject to other eligibility considerations being in place, however, in case if one’s CIBIL score is less than 750 then mostly financial institutions decline a person’s loan/Credit card application outright.
Many times we wonder as to what could be the reason behind a financial institution declining our application despite we having the repayment capacity, proper income, assets etc.? it is CIBIL SCORE.
To a financial institution a low CIBIL score means high risk.
What impacts our CIBIL score?
- Amount of loans and/or number of Credit cards held.
- Whether payment is being made on time.
- Number of times one has applied for a loan and/or Credit card.
- The extent to which the available credit facility is being utilised.
- Somebody else’s loan/Credit card default mapped on our CIBIL report.
- Settled loans/Credit card not removed by the respective financial institution from our CIBIL report etc.
Can we improve our CIBIL score?
YES WE CAN but how?
- Buy your CIBIL score once every six months or at least once every year and review the same to make sure that the information appearing therein is correct.
- Take care of the aforementioned issues.
- Do not apply for loans unless you genuinely need them.
- Consult a professional in order to manage your loans/Credit cards efficiently and hence have an improved CIBIL score.
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