CIBIL Score is a numeric calculation of the person’s eligibility regarding loan approvals. Several banks and lending institutions most often rely on t he CIBIL for their better judgment of the borrowers who are seeking loans through them. CIBIL Score plays a vital role in the country’s financial structure and helps consumers in better ways in securing credits easily and quicker.
While CIBIL Score is calculated through CIBIL, there are several factors playing vital and a key role in the analysis of the CIBIL Score of the individual and among those factors, payment history, unsecured loans (like personal loan ), increased credit limit, credit cards and multiple loans are some of them worth mentioning here.
#1 Keep track of your payment history
The payment history plays an important role in the calculation of CIBIL Score. It also has a vital role in the increasing or decreasing the CIBIL Score of any individual. One must keep in mind that delaying process of EMIs or making late payment of your credit cards can negatively affect your CIBIL Score. So, just be on time and try to clear all your dues in time.
#2 Keep Check on no of unsecured loans
A high number of unsecured loans can also be a negative factor in the calculation of CIBIL Score bringing it down drastically. This is due to the fact that large no of unsecured loans indicates greater risks. Therefore Keep a fair number of secured and unsecured loans for your financial needs and timely repay it. This can positively build your CIBIL Score.
#3 Do not exceed credit limit
Another major factor these days, which most of the urban residents think of is the Credit limit of credit cards. Increasing the limits of the credit cards can affect the CIBIL Score as this is an indication of the burden you carry regarding repayment. Keep your credit utilization within 30% of total spends and if you are bonded for higher utilization, try to minimize it with time. More is the burden on you, more uncomfortable will be your lender to clear your loan application. Maintaining spends within credit limit is one of the considerable factors while you are utilizing the services of the credit cards.
#4 Avoid multiple loans & Credit Cards
Keeping a high number of bank accounts, credit cards and high number of loans may imbibe a sense of insecurity among your lenders and thus lenders tend to study your loan application more carefully than ever. Thus, keep a check on the number of accounts you maintain and keep a clear record of your existing loans and all credit cards.
#5 Opt for small loans
In an effort to build a better CIBIL Score, you need to take several steps. Among those steps involved, you can also consider opting for smaller loans. Opting for small loans, in fact, gives you a chance to build your credit history with the banks and since these are small loans, you can easily pay it off. Opting for small loans and successfully clearing it can build a track record of yours within a bank and thus, a CIBIL Score can be generated based on it. Since the loan repayment has been done, you tend to benefit through it at the best.
#6 Check inaccuracies in your report
Among those steps involved towards the improvement of CIBIL Score, one essential step towards it, is the knowing of the CIBIL Score of yours presently. Thus, get a CIBIL Score through CIBIL and analyze it minutely.
You can also analyse the CIBIL Score very closely. Sometimes it happens that the there may be some data amiss, while entering the details of yours in the records and if you are utmost confident that the Credit record contains some errors, you can quite easily raise a dispute at CIBIL. Thus, it is recommended that keep a check on your CIBIL Record and try to get a CIBIL Score every six months to stay alert and up to date.
Factors which never play a role in the calculation of CIBIL Score
There are some factors which never play a role in the calculation of CIBIL Score and thus one need to know them in order to better strategize your plan in the improvement of CIBIL Score.
Savings accounts never play a role in the calculation of the CIBIL Score. Thus, you can relax in the case of savings accounts when it comes to the calculation of CIBIL Score.
Education, Income, Gender and Race/ Ethnicity
Education, Income, Gender and Race/ Ethnicity, all have no role to play in the calculation of CIBIL Score and one can often discard all these factors, while in the calculation of CIBIL Score.
One must always keep in mind, it takes only a bit of effort to maintain a score of 750 and above in your CIBIL Records and if you are successful in getting it, in most of the cases (around 79% of the cases), you are eligible to get loan through the banks.
A good CIBIL Score is very important to handle several factors as it,
Results in quick approval for different types of loans
Offers a genuine chance to get a line of credit easily
Allows people to get low interest rate credit cards
Offer people a realistic chance to get approved for higher loan limits
Gives people more negotiating power
Easy approval for all sorts of rented or leased houses & apartments
And offers home loans and car loans at low interest rate
A CIBIL Score plays a vital role in the financial journey in regard to loans. Your bad credit score can lead you into trouble at the times and one can face extreme difficulty while getting loans or credit through banks. Thus, take care of all measures and factors responsible for a good CIBIL Score and responsibly pay off your EMI. Use your credit cards and ensure through your small but important steps, your CIBIL Score gets better with time.
Your credit report is one of the most important factors when it comes to deciding your eligibility for a particular loan.
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