Your CIBIL score is a 3-digit numeric summary of the credit information report (CIR), based on your past
credit behaviour and repayment history. The score ranges from 300 to 900; the higher the score, the
better the chances of a loan being approved. While it is not possible to get a perfect 900, once you have
a score of 750 or more, most lenders will lend to you as long as your income and current indebtedness
can support additional payments. Lenders have different score requirements based on their risk appetite.
Why are CIBIL scores important?
A Credit Score plays a critical role in the loan and credit card approval process. This is the first screening
criterion applied by banks and financial institutions when reviewing your loan application. Score on
the CIBIL report is more like a report card for grown-ups, where, the marks range between 300 and 900.
The more you score, the better you attract potential lenders and get good loan deals.
How to improve CIBIL score ?
If you have never had a loan account or credit card, you do not have a credit history and hence a CIBIL
score. While you could always go ahead and apply for a home loan, this would probably not be the best
time to do so.
Instead, you should first work towards building a positive credit history by doing one of the following:
Start with a consumer durable loan– a loan taken to purchase a mobile phone or TV on installments
—and repay promptly.
Apply for a credit card from the bank which holds your salary account. Since you are an existing
customer, it will be easier for you to get a credit card. Now, focus on making timely payments to create
your positive credit footprint.
Apply for a secured card– a credit card which is issued against a fixed deposit you place with the lender.
This protects the lender and helps you build a CIBIL score. You will have a credit score after six months
of credit activity.
If you are intending to make a big purchase like a car or home, ensure that you are not behind in
repaying your credit card bills and EMIs. Instead pay them on time. This is one of the important things
that CIBIL looks into while gauging your credit rate.
Limit your utilization of credit limit: One of the easiest way to improve your credit score is to avoid utilising
your credit card to its full limit. Limit your monthly credit card bill to not more than 50% of your limit.
You can work towards boosting your score through continuous prompt payments, patience and
monitoring your credit profile with these steps: Always pay in full. Prompt, timely payments are a must.
Maintain a healthy mix of secured (such as auto loan) and unsecured loans (such as personal loan,
credit cards). Apply for new credit in moderation. Increased credit appetite may be viewed negatively by
lenders. If you opt for co-signed, guaranteed and joint accounts, monitor these regularly to avoid
negative impact to your score due to others’ negligence. Monitor your score and report regularly to track
your score and apply for customised loan offers from select lenders, based on your eligibility.
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