cibil score

Important Things You Must Know About Cibil Score

In recent years, the propensity to borrow has considerably increased among Indians. Indian consumers are more interested in avail credits and meet their current financial requirements in advance. A recent survey conducted by TransUnion CIBIL concluded that around 74% of the respondents check their credit score at least 2 times each year.

Checking your credit score regularly is a good practice because it helps you to keep track of it. Even though you can avail of a low credit loan, it is best to try and keep a score above 700.

But before delving further into how to maintain your CIBIL score high, there are few important factors you should know about it.

How Is Cibil Score Calculated?

Your CIBIL or credit score is a record of your credit history collected by the Credit Information Bureau (India) Limited or CIBIL. It helps financial institutions to determine your creditworthiness. It is calculated based on various parameters, including your credit payment history, type and number of loan accounts, outstanding debt, credit history, etc.

What Is The Importance Of Your Credit Score?

A good credit score is imperative to help you avail of credits. When you make an application to do so, the financial institution conducts a mandatory credit investigation to judge your ability to repay loans. Even with institutions offering a loan for a low CIBIL score, having a score below 500 can hamper your chances of availing an advance without hassle. But before opting for the loan you must have the knowledge of how to increase CIBIL score because a good CIBIL Score is a key for instant loan approval.

Additionally, having a high credit score can also help you to avail perks like lower interest rates for your loan. This is why most borrowers tend to avail floating interest rates vs fixed interest rates.

What Are The Factors Which Determine Credit Score?

Several factors can influence your credit or CIBIL score. It is important to be mindful of these factors if you want to avoid availing a low credit loan. These are –

  • Your repayment history

A lender will judge your capability to avail and repay before offering you the credit. Thus, factors like late payments and defaults in your payment history can affect your credit score negatively.

  • The high credit utilization ratio

Credit utilization ratio refers to the ratio between your credit utilization and credit limit. If the ratio is high, it means that you rely heavily on credits to make purchases. It also means that you have more debt to pay off. It can affect your credit score negatively. Thus, you should try to keep your credit utilization low.

  • Number of credit inquiries

When you apply for a loan or any other type of credit, the financial institution launches a credit inquiry. Having too many credit inquiries can affect your credit score negatively as they make up 10% of your credit score.

  • Credit mix

Availing a mix of credits instead of a single type of credit can reflect better on your credit score. For instance, lenders tend to prefer individuals who have optimally used credit cards as well as loans together without missed payments.

Is it possible to avail of a loan with bad credit?

In case you are wondering “how can I borrow money with bad credit”, the only way to do so is by trying to increase your CIBIL score. Following are a few ways through which you can do so –

  • Make timely payments.
  • Avoid using too much credit.
  • Maintain a healthy mix of different types of credit.
  • Monitor your credit score.
  • Review your credit history regularly.

These are the four ways to answer your question of how to increase the CIBIL score.

However, even with a low credit score, you can avail advances like Loan against Property from financial institutions like Bajaj Finserv. Since you are availing of the advance against collateral, the lender might not put much emphasis on your credit score.

Also, there are several types of loans against property that you should know about with a low credit score to meet your financial needs. Bajaj Finserv offers flexible repayment tenors along with no charge prepayment and foreclosure charges.

They also provide pre-approved offers that can make availing of the loan faster and easier. These offers are available on various financial products, including secured and unsecured credits like home loans, personal loans, business loans, etc. You can check your pre-approved offer by providing your name and phone number.

However, even if you can avail low credit loan, you should aim to maintain a high CIBIL score. This can help you to avail perks like lower interest rates, and more negotiating power for your advance.

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