Do you know that banks consider CIBIL score before processing a loan? When you apply for a loan, banks primarily look for a CIBIL score before sanctioning a loan. It plays an important role in the banking sector as far as loans are considered.
What is CIBIL?
CIBIL (Credit Information Bureau India Limited) is a credit information company that gathers financial data from banks, lenders and other financial entities. The data that is gathered is used to understand the creditworthiness of an individual.
After evaluating, a score ranging between 300 and 900 is derived. Anything above 750 is considered a good credit score. If the score is below 600, it shows that the borrower had not made regular payments in the past and his/her application leads to rejection. Thus, it is necessary for an individual to have a good credit score. Check the credit score first before applying for any sort of a loan.
A credit score helps financial institutes to evaluate the repayment capability of the applicant. If the credit score is below the minimum limit set by the bank, the application gets rejected without any second thought.
Here, let us see a few steps to enhance the credit score
It is important to pay credit card bills regularly. Missing a due date is definitely a no, so pay your balances on time without any default.
Despite making the complete payment of your credit card bill on time, high usage of credit limit can still have a negative impact on the credit score as it shows that you are relying more on credit. So keep a check on your credit card spends.
Pay your EMIs on time as even a delay for a single month can ruin your credit score.
Set reminders to pay EMIs or other bills on time and make necessary arrangements to pay them on time
Opting loans for longer durations and paying EMIs on time will have a positive impact on the credit score.
Clear your previous loans before applying for a new loan. One should also keep in mind that re-applying for a loan constantly brings down the credit score. Look for an alternate source of money to fulfil your requirements rather than relying on loan.
Frequent credit limit enhancement can also affect the score to a great extent. Banks think that you are too much dependent on credit.
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