The Ultimate Guide to CIBIL Scores and how to Improve Yours
Availability of a loan helps you meet planned and unplanned financial needs. However, getting approval for a loan requires you to meet several eligibility requirements. One such parameter is your CIBIL score.
But do you know what a CIBIL score is and how it can impact your loan eligibility and interest rates? In short, this score reflects your creditworthiness and lenders use it to assess your loan application. Read on to learn what a CIBIL score is, why it is essential, and how you can check and improve your score to increase your chances of getting approved for a loan on favourable terms.
Meaning of CIBIL score
A CIBIL score numerically represents your creditworthiness or how worthy you are to get credit. It is based on your credit history with loans and credit cards, especially your past repayment conduct. All of this is recorded in your credit report.
Based on the report, you are assigned a 3-digit number ranging from 300 to 900, which is your CIBIL score. A score above 700 is usually considered a good score.
Your CIBIL score is calculated based on various factors, including your:
· Repayment history, be it timely repayment, missing EMIs or defaults
· Credit utilization, which is how much credit you are using from the credit available to you
· Credit mix, which is your experience with different types of credit
· Your recent applications for credit
The length of your credit history can also be a factor in the calculation of your score.
Importance of CIBIL score
Banks and other financial institutions use your CIBIL score to assess whether to approve or reject your loan application. Having a high CIBIL score implies that you have a positive credit history and are more likely to repay your loans promptly. This allows you to get a more competitive interest rate and a higher loan amount.
Having a low CIBIL score indicates a negative credit history and may make you appear as a risky borrower. As a result, your loan application may be rejected, or you may be offered a higher interest rate.
How to check your CIBIL score
Checking your CIBIL score is a simple process. You can do so on the official CIBIL website or on Bajaj Markets. Follow these 3 easy steps to check your CIBIL score for free on Bajaj Markets.
1. Click on ‘Get Your CIBIL Score For Free’ on click here
2. Fill out the online form on the top of the page with details such as your name, employment type, PAN and salary
3. Click on ‘Proceed with OTP’ and enter the OTP you get on your phone number
Once your details are authenticated, you will be able to access your CIBIL score and credit report.
How to improve your CIBIL score
Improving your CIBIL score can take time and effort, but it is crucial for you to get an affordable loan in the future. Here are some steps you can take.
· Pay your dues on time, as late payments or loan defaults can negatively impact your CIBIL score
· Keep your credit utilization ratio below 35%
· Keep track of your credit report to ensure all information is accurate and up to date
· Do not apply for a range of credit instruments at the same time, be it loans or credit cards
· Try to build your credit history with a mix of credit types, such as collateral-free loans, credit cards and secured loans
Knowing your CIBIL score and taking steps to improve it can increase your chances of getting approval for a loan on pocket-friendly terms. So, check it periodically and take the necessary steps to build a strong credit history.
Using the Bajaj Markets App, you can not only check your score and monitor it, but also apply for a range of loans and credit facilities such as credit cards and EMI cards. Download it today from Google Play or the App Store and start your journey towards financial wellness!