A CIBIL check is essential before applying for credit, specifically a loan, to ascertain your credit score. Your credit history is represented by this score, which varies from 300 to 900. When a lender gets your loan application, they will likely perform a credit check to discover whether you are at risk of defaulting.
This has an impact on whether or not your loan application is granted and the terms of the loan. Here’s all you need to know about how to increase CIBIL score, which is crucial in the borrowing and repayment process.
What elements are used while calculating your CIBIL score?
Your credit score, also known as your CIBIL score, is determined by Trans Union CIBIL’s unique algorithm. Trans Union CIBIL is one of India’s oldest credit info companies, gathering information on individuals from other financial organizations and banks. This information is used to construct your Credit Information Report (CIR), which provides information about your credit history. Examine the formula to know how to increase CIBIL score.
Your CIBIL score is heavily influenced by your CIR’s Accounts and Enquiries sections. The Accounts section contains information on any prior or current loans or credit cards you may have and the lenders’ identities. Account numbers, dates of opening, and most recent payments may be included, as well as auto loans, home loans, personal loans, and other loans. It also maintains track of your current invoices and any late payments or credit report errors. This folder contains loan amounts and monthly repayment information for up to three years. In the Enquiries area, you’ll see the number of times lenders used CIBIL to check your credit report for a loan or credit card application and the kind of loan you applied for. You must know how to increase CIBIL score.
Both of these sections impact your CIBIL score, which is determined by three main elements. The following are a few of them:
1.Your history of repaying credit card debt
2.How have you dealt with a credit mix in the past?
3.One of the essential things you can do is use credit wisely
Why is your CIBIL important to you?
Your credit score is a reflection of your ability to handle your money. It gives lenders information about your ability to repay the loan. It’s also important to know how to increase CIBIL score.
Check your credit score: You’ll know where you stand and what areas you need to improve when looking at your score and report. Your credit report, also known as your CIBIL, summarises your current and past credit activity. Regularly reviewing your information may also help you spot and solve any errors that have resulted in a lower score due to no fault of your own.
Is that enough to get a loan? Most financial organizations and lending platforms consider a CIBIL score of 750 or above ideal. Consequently, building a credit history and acquiring a credit score is essential since it allows you to apply for loans with advantageous terms. If you have no credit history or score, lenders find it difficult to assess your creditworthiness.
You may check your score on the official CIBIL website by creating an account and presenting an ID such as your PAN Card, passport, or driver’s license. These IDs are often asked as part of the KYC paperwork when you apply for a loan, and you should double-check that they include the correct information. Once a year, you may receive a free CIBIL check; you must pay for a membership plan. By this, you can know how to increase CIBIL score.
By filling out a quick form with your information, you may not only check your score but also get access to your Credit Health Report. You may also be eligible for a tailored loan, or other financial product offers if you have a strong credit score.