What is CIBIL Score and a Credit Information Report (CIR)?
Why is CIBIL score important for getting a loan sanctioned?
How can CIBIL score be improved?
You need to maintain a good credit history for improving your credit score (CIBIL Score). It will give the right impression to your lenders. You can do it by following simple rules such as:
- Make sure that your dues are paid on time.
- Avoid late payments.
- Maintain low balance.
- Refrain from using too much credit. Maintain balance in terms of credit utilization.
- A healthy balance of credit is mandatory for you.
- You should try to maintain a perfect balance between secured and unsecured loans.
- Avoid obtaining too many unsecured loans.
- You should be moderate in terms of new credit application.
- Be cautious while applying for new credit.
- Keep a tab on your co-signed, guaranteed and joint accounts and properly assess them on a monthly basis.
- You are equally liable for a default in case of co-signed, guaranteed or jointly held accounts.
- Your can have difficulty in accessing credit if your joint holder (or the guaranteed individual) commits any negligence.
- Make it a point to evaluate your credit history on a frequent basis.
- If you want to avoid loan application refusal, then buy your CIR from time to time.
What all factors affect CIBIL score?
Your credit (CIBIL) score can be mainly affected by four factors:
If you have a record of late payment or EMI default, it can have a negative impact on your credit score. Besides, it will give an impression that you are facing troubles in paying your current debts.
High utilization of credit limit
Excessively spending on your credit card can be a hindrance in having a good credit score. Similarly, if there is an increase in the current balance of your credit card, it shows that you are having an increased repayment burden, and thereby affects your credit score negatively.
Avoid having excessive unsecured loans
If you manage to maintain a right balance between the secured loans (home loan) and unsecured loan (personal loan, credit card etc.), it will have a positive impact on your credit score.
Avoid opening many new accounts
If you have recently availed multiple loans and credit cards, then lenders can draw a conclusion that you have increased debt burden. It will put your credit score down.