Ever wondered what is a CIBIL score? What is all the hype surrounding it? At some point in your life, this awareness will work wonders for you.
A CIBIL score is a marker of your credit discipline provided by the Credit Information Bureau, India Limited. Your credit rating is a summary of various factors, such as –
- Credit repayment history
- Credit accounts
- Total amount owed
- Credit tenures
- Credit utilisation ratio
Your CIBIL rating helps lenders determine your suitability for loans or credit cards. It is one of the most trusted entities to evaluate a borrower’s credit-worthiness in India. Further, it is a number ranging between 300 and 900, which is referred to as the score and is a sum of your credit behaviour. The higher your score, the better your chances of loan approval at lower interest rates.
This score also has a wide-ranging impact on your access to credit cards as this is your first impression in front of your lender. In case your scores aren’t up to the mark, the lender will look at your other documents such as salary, tax payment, debt to income ratio, and employment history. Doing this would take longer. You will also require more amount of convincing to get your credit approved, and here you will fail to achieve a hassle-free experience.
To get clarity on your scores, go for a quick online CIBIL check. Doing thiswill help you find your complete credit history, which will enhance your understanding of where you stand.
CIBIL rating is an essential component for a smooth financial journey and here’s why:
- Easy approval – A good score will enhance the trust of the lenders on your repayment discipline, and therefore provide a larger and quicker approval rate on all your applications.
- Reduction in interest rates – One of the major benefits of keeping a good score is that you will get a loan at a lower interest rate from the lender, eventually reducing your financial burden.
- Power to negotiate – Through a good score, it will be easier to negotiate the terms of the loan with the lender as per your preference.
- Extension in your credit repayment tenure – A higher credit repayment tenure will help you to pay off your loan in parts and at a slower pace which eliminates your financial burden to a large extent, as you are not in a hurry to pay your debts back.
- Easy approval of higher credit amounts – A good score will help in getting a higher amount of credit quickly, and lenders would see a lesser amount of risk associated with giving you a loan.
- Discount on processing fees and charges – A good score will also eliminate the otherwise cumbersome processing fees and charges.
- Easy access to pre-approved loans – A substantially high score indicates your clean credit history online, which helps you get pre-approved loans easily.
Check your CIBIL rating
Now, it is possible to check CIBIL score online, and it will be as quick as a wink.
- Visit the official website of CIBIL for online CIBIL check “https://www.cibil.com/”
- On the top right side, click on ‘Get your CIBIL score’
- Create an account by filling in your personal details such as name, DOB, E-mail, phone number, pin code and a valid ID detail like PAN card, driving licence, Aadhar card or passport
- Once the CIBIL account is created, a payment has to be made for the period of your choice. This will allow you to keep a check of your scores on a regular basis.
- Post this process, a verification mail will be sent to your account to confirm your details
- Once the verification is complete, your CIBIL rating will be generated
You can also check CIBIL scores online on specific credit card payment portals and generate a report for free.
Additional Read: How to Check Your CIBIL Score Online
Improving your CIBIL rating
An ideal score is always above 750, but anything above 700 would also be considered as a good score and can have a positive impact on your loan approval. A score below 600 is considered to be risky in getting your credit requirement approved. Having said that different types of loans would have slight variations in their preferred CIBIL ratings. And, if you are an applicant, you must note that for unsecured loans, lenders prefer a higher score than in the case of a secured loan.
If you do not have a good score, don’t push the panic button yet. Skip the worry and go through these easy ways to improve your score.
- First and foremost, timely payment of dues must be made to demonstrate good credit behaviour
- It is recommended to reduce the utilisation of credit, preferably up to 30% of your current credit limit
- A healthy mix of secured and unsecured credit is better than having too many unsecured loans on your report
- It is advised to check your credit history online, frequently to avoid errors in data which need to be reported immediately and rectified
- It is also advised to avoid making too many applications or inquiries during a short period so as to avoid negative rating.
CIBIL rating for a personal loan
A personal loan is an unsecured loan where the requirement of collateral is absent. Due to this reason, it is approved only after having a good look at your CIBIL score. To avail personal loans, an applicant needs to maintain a score of 750 or above in practice.
For individual who do not qualify the score criteria, can avail of a lower amount of loan or ask a close family member with a good score to become a guarantor.
CIBIL rating for a home loan
The minimum CIBIL score required to be eligible for home loans is 750 or above. Although, since home loans are secured, some lenders may approve an application, even if the score is slightly lower. If you have a good score, you can secure up to 85% of the cost of your property through the loan. Remember, a clean credit history will help you get housing finance faster.
CIBIL rating for a business loan
Since loans for businesses are usually taken for a higher amount, there is a considerable level of risk attached here. Therefore, a good CIBIL score plays a critical role in the process. To avail good business loans with competitive interest rates, a healthy score can be beneficial.
The minimum requirement of the score is 750 for a business loan. A score above 850 is perfect for quick approval. A score between 750 and 800 would have 80% chances of approval. Further, a score between 700 and 750 would be just enough to get an unsecured loan. During the process, your investments, savings and trading accounts may be checked to understand your credit history further.
CIBIL rating for a used car loan
The preferred CIBIL score for a used car loan will be anything above 750. Having said that a score of 650 or below would not have your loan application rejected but, you will have to put up with a loan at a higher interest rate. A good credit score can provide various benefits while availing a used car loan such as 100% vehicle financing, lesser processing fees, lower interest rate, and zero down payment.
Additional Read: CIBIL Score for Vehicle Loans
CIBIL rating for a two wheeler loan
A two wheeler loan can be availed from financial institutions using a CIBIL score of 600 and upwards, even though a much-desired score would be anything above 750. Most financial institutions usually secure up to 80 to 90% of two-wheeler loans.
Therefore, an applicant with a good credit score will have to go through a less tedious procedure to secure a vehicle loan. On the other hand, a bad score can lead to more down payments, the need for a co-signer, lack of negotiation terms and an increase in interest rates.
The bottom line
If you want to have a hassle-free experience with securing loans to fulfil your wishes, it is critical to have early awareness of your credit score. In case of a bad score, secure a remedy as soon as possible.
None of us would enjoy a situation where, one fine day, logging into a lender’s site to secure a loan is stopped short due to a low CIBIL score.
Additional Read: Myths Related To CIBIL Score
Are you looking for finance for an immediate or a long-term purchase? If yes, then look no further than Tata Capital – One of India’s most trusted lending institutions. We offer all types of loans – from personal loans to business loans to home loans.
We also provide car and used-vehicle loans. Our finance offerings come at attractive rates of interest, flexible and often customisable repayment tenures, and little paperwork. At Tata Capital, we ensure your loan application process is speedy and without any running-around hassles.
So, what are you waiting for? Now that you know what is a CIBIL score, check yours online and apply for a loan today!