Generally, a CIBIL score above 750 is considered good, where the chances of loan approval become higher.
Having a good credit score not only makes it easier for you to get loans easily, but you can also get loans at a relatively lower rate of interest.
Credit score is an important metric for availing loans, including personal loans, home loan and auto loans. When you approach a lender for a loan, the lender checks you cibil score Or else decide on the credit score and loan approval and its interest rate. Hence, CIBIL score is very important. Here is all about CIBIL Score and what mistakes you should avoid to have a good credit score.
What is CIBIL score?
CIBIL score is a three digit number between 300 to 900. The more score you have, the better. Generally, a score above 750 is considered good, where the chances of loan approval become higher. It is a numerical summary of your credit history and a reflection of your credit profile, which reflects your credit behavior as a borrower. It also shows whether you have defaulted on any repayment in the past. This score gives an overall indication of your creditworthiness and history.
Apart from CIBIL, there are other major credit information agencies including Experian, Equifax and CRIF.
Avoid these mistakes to have a good CIBIL score
Do not delay in payment of dues: If you want to maintain a good CIBIL score, the first and foremost thing is to be punctual with repayments – pay within time and never be late. Repayment of loan or credit card dues has a huge impact on your CIBIL score.
Never exhaust your credit card limit: If you are struggling to stay within the existing limit of the card, then it is advisable to go for a credit card with a higher top limit. Credit utilization ratio should be limited to 30 per cent to have a good CIBIL score.
Miscellaneous Loan Products: It is better to diversify the loan portfolio with a good mix of both secured and unsecured loans to get a higher CIBIL score. A credit card is an unsecured loan, whereas a home or vehicle loan is a secured loan.
Do not apply for multiple loans or credit cards in a short span of time: When you approach a lender for a loan, the lender checks your credit score. This is called ‘Hard Enquiry’ and it remains on your CIBIL report for 2 years. Multiple hard inquiries in a short period of time can hurt your credit score significantly.
Do not close your old credit accounts: Closing old credit accounts, though may sound good, reduces your available credit limit and thus increases your credit utilization ratio, thus adversely affecting your CIBIL score.
According to the TransUnion CIBIL report, almost 79 percent of loans are approved to those who have a CIBIL score of 750 and above. Having a high CIBIL score not only makes it easier for the applicant to avail the loan easily, but also avails the loan at a relatively lower rate of interest.
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