Some Facts to Know About CIBIL Score

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Your credit score is a three-digit number provided by CIBIL, which represents your credit history. And every time you apply for a loan, the lender needs your CIBIL score to analyze all your debts and your payment history to verify the credibility of it.

A good CIBIL score indicates that your finances are in order and you have a good record of all your previous loans. Plus, it helps you get approved for a loan at the best possible rates. However, a bad CIBIL score works in reverse and can lower your credibility.


 

How is the CIBIL score calculated?

Multiple factors build your CIBIL score and based on it, your CIBIL score is calculated:

Your payment history

Timely repayments of your old and existing loans positively affect your credit score and will lead to a high credit score. On the other hand, late payments lower your credit score and can make it difficult to access loans in the future.

Having a good payment history always indicates that you made your payments on time and this makes lenders trust you for their new loans. As a result, the loan application is always approved with a good CIBIL score.

While late payments also lead to late fees, penalties increase the total amount due. So, to avoid such consequences, you must repay the loan on time and this will also help you to maintain a good CIBIL Score.

Multiple loan applications

When you are looking for a loan, applying multiple times with different lenders can lead to difficult inquiries about your CIBIL. This can further affect your score. Therefore, it is always best to check your CIBIL score before applying for a loan. Doing this also helps you know your eligibility and therefore you can apply only with the lenders that fit your eligibility criteria. This also reduces the chances of your loan being rejected and will ensure loan approval.

Type of loan used in the past

Taking advantage of multiple loans increases the debt-to-income ratio, and when it comes to multiple unsecured loans, it is viewed negatively anyway. Therefore, if you have applied for multiple loans in a short period or have multiple credit cards, this can make you appear to be credit hungry and lenders may be hesitant to lend to you in such a condition.

Cancellations -

Cancellation can affect your credit score hugely. Also, recent punishments hurt your CIBIL more negatively compared to previous ones.

To avoid such impacts, it is important to verify your CIBIL score before applying for a loan. Doing this will also give you a clear idea of ​​whether or not your loan application will be approved.

How to build the CIBIL score?

A person without loan records has a CIBIL score from zero to negative, this is not considered good as the lenders have no record to trust the applicant. Therefore, if you have to take out a loan in the near future, to eliminate the hassle, you must create a credit record for yourself. Steps to create a credit history:

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