Your creditworthiness is the key to getting approval for loans, credit cards, and other financial products. One of the most important factors that determine your creditworthiness is your CIBIL score. It is a three-digit number that represents your credit history and repayment behavior. The higher your CIBIL score, the better your chances of getting approved for a loan or credit card at lower interest rates.
What is a CIBIL Score?
CIBIL (Credit Information Bureau India Limited) score is a credit score issued by the Credit Information Company (CIC) in India. It is a numerical representation of your credit history and repayment behavior. The score ranges from 300 to 900, where a score above 750 is considered good. A CIBIL score is calculated based on your credit history, including your payment history, credit utilization, credit mix, and credit inquiries.
Why is CIBIL Score important?
Your CIBIL score is an essential factor that lenders consider when evaluating your creditworthiness. A higher CIBIL score indicates that you have a good credit history and are likely to repay your loans on time. On the other hand, a lower CIBIL score indicates that you have a poor credit history and may default on your loan repayments. Lenders may reject your loan application or offer you a loan at a higher interest rate if you have a low CIBIL score. Borrowers should have brief knowledge about CIBIL score before applying for Loan.
How to check your CIBIL Score?
Here's a short step-by-step guide on how to check your CIBIL score:
Step 1: Visit the official CIBIL website on www.cibil.com
Step 2: Click on the "Get Your CIBIL Score" button on the homepage.
Step 3: Fill in your personal details, such as name, date of birth, gender, and address, as requested.
Step 4: Verify your identity by providing additional information, such as your PAN card number, passport number, or voter ID card number.
Step 5: Choose a subscription plan that suits your requirements.
Step 6: Pay the subscription fee using a credit card, debit card, or net banking.
Step 7: Once the payment is confirmed, you will receive your CIBIL score instantly via email or SMS.
How to improve your CIBIL Score?
Improving your CIBIL score requires a disciplined approach towards managing your finances. Here are some tips to improve your CIBIL score:
Late payments can have a negative impact on your CIBIL score. Ensure that you pay your bills, loan EMIs, and credit card bills on time.
Credit utilization is the percentage of your credit limit that you are currently using. A high credit utilization ratio can lower your CIBIL score. It is advisable to keep your credit utilization below 30% of your credit limit.
A healthy credit mix includes a combination of secured and unsecured loans. It shows that you can handle different types of credit. However, do not take multiple loans or credit cards just to improve your credit mix.
Every time you apply for a loan or credit card, the lender makes an inquiry on your credit report. Too many inquiries can lower your CIBIL score. It is advisable to limit your credit inquiries and only apply for credit when necessary.
Check your credit report regularly and ensure that there are no errors or discrepancies. If you find any errors, report them to the Credit Information Company and get them rectified.
Also Read: Importance of CIBIL Score
Conclusion
Your CIBIL score is crucial for loan and credit card approval with lower interest rates. A good score is above 750 out of 900. Improve your score by checking regularly, maintaining good credit history, and following tips like paying bills on time, keeping credit utilization low, maintaining a good credit mix, limiting inquiries, and monitoring your report. Remember, discipline is key.
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