How to improve CIBIL score? :-The CIBIL score is a three-digit number that indicates an individual’s creditworthiness. It is based on the individual’s credit history and assists lenders in determining if the borrower is likely to repay their debts on time. A higher CIBIL score signifies a lesser credit risk to lenders, making it easier for people to get loans on favorable terms. On the other hand, a low CIBIL may result in higher interest rates or even loan denial.
What is a good CIBIL score?
A decent CIBIL score is normally between 750 and 900. This indicates a high credit profile and the likelihood that the individual would repay loans on time. Lenders generally consider a CIBIL score of 750 or more to be good, and persons with such scores are more likely to qualify for loans with favorable conditions and interest rates. Maintaining a high CIBIL score is critical for gaining access to more loan options and financial prospects.
How is CIBIL Score calculated?
The CIBIL score is computed using the individual’s credit history and financial conduct. The main factors that affect the calculation of a CIBIL score are:
1. The payment history is the most crucial aspect in determining a CIBIL score. It checks to see if the client has made regular payments on their credit cards and loans.
2. Credit utilization: This component determines how much of the individual’s available credit limit is being used. It is best to keep credit utilization low in order to maintain a decent CIBIL score.
3. Credit history length: The longer an individual’s credit history, the better their CIBIL score will be. It demonstrates a track record of appropriate credit activity.
4. Credit mix: Having a mix of different types of credit such as credit cards, loans, and mortgages can positively impact the CIBIL score.
5. Recent credit inquiries: Multiple credit inquiries within a short period can indicate a higher credit risk. This factor can slightly lower the CIBIL score.
These factors are used by credit bureaus like CIBIL to calculate an individual’s credit score, with different weights assigned to each factor. The final three-digit CIBIL score is then generated, with a higher score indicating a strong credit profile and a lower credit risk.
How to track your CIBIL score?
You can track your CIBIL score by following these steps:
1. Visit the official website of CIBIL (https://www.cibil.com).
2. Look for the “Get Your CIBIL Score” or “Check Your CIBIL Score” option on the homepage.
3. Click on the option and you will be directed to a page where you can request your CIBIL score.
4. Enter the necessary information, such as your name, birthdate, PAN card number, etc.
5. Examine the details given and send in the request.
6. Pay the necessary fee, if applicable, to access your CIBIL score online.
7. Once the request is processed, you will be able to view your CIBIL score instantly on the website.
Alternatively, you can also track your CIBIL score through other credit bureaus like Experian and Equifax. These bureaus also provide credit reports and scores that can give you insights into your creditworthiness. It is recommended to check your CIBIL score periodically to stay informed about your financial standing and identify any discrepancies that may need to be addressed.
How to improve CIBIL Score?
Improving your CIBIL score requires consistent effort and responsible financial management. Here are some steps you can take to improve your CIBIL score:
1. Pay your bills on time: Make sure to pay your credit card bills, loan EMIs, and other dues on time. Late or missed payments can have a negative impact on your CIBIL score.
2. Maintain a low credit utilization ratio: Try to keep your credit card balances low in relation to your credit limit. High credit utilization can negatively affect your CIBIL score.
3. Avoid applying for multiple credit accounts: Limit the number of new credit applications as multiple inquiries can indicate financial stress and affect your CIBIL score.
4. Keep an eye on your credit report: Check your credit report frequently for inconsistencies or mistakes. Challenge errors and make sure that the information is updated to accurately reflect credit history.
5. Diversify your credit mix: Your credit score can be improved by having a variety of credit accounts, including loans, mortgages, and credit cards. But only take out loans that you can afford to pay back.
6. Maintain a long credit history: The longer your credit history, the better it is for your CIBIL score. Maintain older accounts in good standing to demonstrate a strong credit profile.
7. Manage your debts effectively: If you have outstanding debts, create a repayment plan to reduce them gradually. Paying off debts in a timely manner can boost your credit score over time.
By following these steps and practicing good financial habits, you can work towards improving your CIBIL score and enhancing your creditworthiness in the eyes of lenders.
