So you’ve got a bad credit score and you have no idea why. Everything seems to be going well on the surface and you should get your hands on that loan you need, so why is your credit score an obstacle? Read on to find out.
Understanding your Credit Score.
Source : creditserviceco.com
Before we get into details, we must first answer the question. What exactly is a Credit Score or a CIBIL score?
CIBIL stands for Credit Information Bureau (India) Limited.
A Credit Score or the CIBIL Score is a numeric summary consisting of a three-digit code of your credit history. With the help of credit history in CIR the score is located. But then, what is CIR?
An individual’s payment history across loans and credit institutions over a period of time is termed to be CIR. Let us rephrase it in simpler terms to give you a better idea. The details such as savings, investments or fixed deposits are not contained in a CIR. What it does contain is, detailed information on the credit you have availed, such as home loan, automobile loan, credit card, personal loan, overdraft facilities. Simple enough, right!
The credit score normally ranges from 300 to 900. A score above 700 is generally considered pretty good.
How will you find out your CIBIL score?
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You can find it online by following a fairly simple procedure. Fill up an online request form available on CIBIL’s website and you’re good to go. Just a few minutes of your time and a nominal amount of fee is what it’ll take!
A word of advice before you proceed.
Always obtain your credit report and score personally than through a bank/financial institution. Enquiries from banks and other lenders can negatively affect your score. We don’t want that happening for you! So yes, please spend some time and do it on your own.
Why is your CIBIL score even important?
Source : creditscorebasicsblog.com
Now that we have discussed quite a lot about CIBIL scores and finding out the scores, the main question on your mind is, why should you even bother spending time and money on finding out this score? What good is it going to bring you?
Well, lots. Let us state why it is important to know your CIBIL score.
CIBIL is a major parameter in loan application and approval processes. Without a fitting CIBIL score, you may not be eligible for loans. And that is not a position you want to be in!
Whenever you submit a loan application, the bank will look at your CIBIL score and credit report. Needless to say, if you have a low score and a bad credit history, the chances of your application getting approved are low.
So higher the CIBIL score, higher the chances of approval. And this is why you should pay attention to your CIBIL score.
I got my score. I’m not satisfied. How to Improve Credit Score?
- Current position.
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Know exactly where you stand and set a target on how much you want to improve. We suggest you to take your score above 700, that’s going to get your loan application accepted. Although 700 is good, the closer you get to 900, better it is for you.
- Pay your outstanding loans.
Source : startcredits.com
This is a no brainer, right? Timely payment of outstanding loans will reflect well on your image as a responsible applicant. Your credit worthiness is enhanced and so is your CIBIL score. So make timely payments and improve your credit score! Also, make full payments. Part payments are considered an overdue and will not be much appreciated by your bank. Full payments will earn you brownie points!
- Use your credit card wisely.
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Do a thorough cleaning of your credit card. By this we mean, using the credit card in such a manner that you clear off the credit before the due date arrives. Clear any outstanding dues that you may have, it won’t reflect positively on your score. And keep only one, or a maximum of two credit cards in possession. Such credit card discipline will reflect positively on your CIBIL score.
- Get inaccurate entries in your CIBIL score rectified.
Source : myrentalhistoryreport.com
If you find out any incorrect entries in your credit report, you must appeal against them on the CIBIL website and get them corrected. These entries can affect your score adversely, so it is very important to get them rectified in time.
- Pay your EMI’s regularly.
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Prompt payment of equated monthly installments of your past bigger loans on time will help in improving your track record to pay bigger amounts and thereby getting a higher CIBIL score/rating. If it comes to the notice of your banker that you are not very regular in your EMI payments, it is but obvious that your loan application stands a good chance of getting rejected. So pay your EMI’s regularly!