Here’s a fact! Your CIBIL score or credit rating affects your personal loan eligibility and loan approval chances. It also plays a significant role in determining your loan interest rate. So, it’s no secret that you must maintain a good CIBIL rating.
What is a good CIBIL score?
Your Credit Information Bureau (India) Limited (CIBIL) score is measured on a scale ranging between 300 to 900 points. The higher you fall on this scale, the better. If your CIBIL score is above 750, most lenders consider it an excellent feat. It also boosts your chances of getting a personal loan or any other kind of loan approved.
You can check your credit rating by visiting the official CIBIL website.
Additional Read: All You Need to Know About CIBIL Score
Factors that make your CIBIL report look bad
A bad CIBIL report is never good news! But you can always bring a poor CIBIL score up in just a matter of months. Read on to know what you are doing wrong that is bringing your credit score down.
• Defaulting or delaying your credit card bill payments
Recurrently missing or defaulting on timely credit card bill payments will dent your CIBIL report. Why? Because showing payment delinquencies in repaying your credit card debt will indicate your incapability to pay your bills.
• Taking too many loans or credit cards
If you already have many active loans like a home loan, vehicle loan, or personal loan, CIBIL report will reflect this by lowering your score. A high number of loans indicate that you carry substantial debt.
Generally, lending institutions check your Debt to Income or DTI ratio before sanctioning you a loan. If they feel you already are paying several EMIs, you might not get a loan or get one at a relatively higher rate of interest. Therefore, you should reduce the number of active loans before applying for a fresh one.
The same goes for credit cards. Avoid taking too many cards, as this reflects that you have a high credit utilisation ratio (CUR). Here, the CUR denotes how much you currently owe against your credit limit.
A high CUR brings down your CIBIL score and makes you an undesirable loan applicant. When you reduce your loans and have the right number of credit cards, it will positively reflect on your CIBIL report.
• Not using your credit card at all
Believe it or not! Your personal CIBIL score can go down if you have a credit card but don’t use it at all. Only when you pay your bills on time can the authorities calculate your repayment capacity. Therefore, even if you don’t wish to use your credit card for large payments, use it to make small purchases. Repaying credit card bills timely and recurrently will boost your CIBIL report.
Additional Read: How Does a CIBIL Score Impact Your Personal Loan Eligibility?
The bottom line
With a good CIBIL score, your loan eligibilityimproves significantly. So, if you have improved your CIBIL score and are now looking for personal finance, choose one of India’s most trustworthy lending institutions – Tata Capital.
We extend personal finance at customisable repayment terms, relaxed eligibility criteria, minimal paperwork, and competitive personal loan interest rates.
To know more, reach out to us today!