Want to Avail Personal Loan in India? You Need to Know These Key Things about CIBIL Score

Are you facing a challenge in getting your loan application pass through the approval desk even when you are perfectly eligible? If Yes, then you probably need to think about CIBIL scores. Most of us may need to borrow money from financial institutions. But various unforeseen circumstances can interrupt the repayment capacity. You may also choose to avoid the payment notifications and fall on the defaulter list. While this may not affect your day-to-day life, your chances for a future loan will take a backseat.

What is CIBIL?

TransUnion Bureau or Credit Information Bureau (India) Limited is a company that holds the largest number of consumer data in India. This is primarily a credit information company that was established in 2000 and works in accordance with the Credit Information Act of 2005.

What is meant by a CIBIL Score?

So what exactly is a CIBIL score? A CIBIL or credit score is a three-digit number that summarizes your credit history and your credit profile. This monthly score is given to you by the lenders based on your borrowing and repayment history. The score appears on the CIBIL report, which is a consolidated report that includes your personal information, contact details, and loan account information. You can access your CIBIL report by purchasing it from the company's website at a monthly charge of Rs 550 or an annual charge of Rs 1200. Alternatively, you can check the score in various personal loan apps.

What does a CIBIL Score do?

Maintaining a good CIBIL score, or a score above 750, is important if you want to get a personal loan in India. Your credit score acts as a guarantor for repayment. Therefore, every lender will check this score before considering your application. If you have no credit history, your credit score will automatically be -1. And in that case, you can borrow a personal loan and repay it on time.

Ways to Improve Your Credit Score

Your CIBIL score can range from 300 to 900. You can consider your score as 'good' if it is above 750. While past credit behavior is the most common factor for a poor score, other factors such as income, current debts, defaults in repaying previous credits, and rejections of loan applications can also affect your credit score and the chances for personal loans.

But you can always improve your score with the following techniques-

● Do not continue with credit cards that are not currently in use

● Avoid applying for loans immediately after a prior rejection

● Avoid defaulting on your EMIs or credit card payments

● Limit the use of credit cards to just one

● Use debt consolidation loans so that you do not come across a debt collection agency

● Avoid taking credits without a robust repayment plan

● Avoid taking loans for a long duration so that you can get away with your debts within a short period of time

● Take the assistance of a financial advisor to know about the tax-saving methods and good financial planning

● Get your interest rate negotiated to a lower value by calculating it using personal loan calculators

● Avoid serving as a co-borrower on a loan when you already have other credits to repay

Thus, your CIBIL score is a critical determinant of loan approvals. You may need a loan at any point in time to meet financial demands. So, you must maintain a good credit score to prevent your applications from getting rejected.