A Complete Guide To Credit Score

Tips to Check CIBIL score

Are you thinking of how to check CIBIL score? Well, it is simple. All you need to do is visit a genuine credit information company website. In most cases, the company may charge a small sum to evaluate the CIBIL score. If you wish to obtain unlimited access for a credit report and score, you have to pay a monthly fee or yearly fee at the website. Some websites also permit checking credit score for free of cost. But they let you check only once.

Lenders and financial companies also provide you various options and tools to evaluate credit score. Companies like Bajaj Finserv permit the user to evaluate the CIBIL score without any charges. You just have to visit the company website, enter your information, and access credit scores in a quick time.

Why is your CIBIL score evaluated before providing a loan?

CIBIL score evaluates the individual’s overall creditworthiness. When a lender wishes to give you a loan, they would first evaluate your CIBIL score and review the loan application. It is evaluated for several reasons and they are as follows:

  •         To determine whether the individual is suitable for the loan or not.
  •         To know the risk level of the profile and review the individual’s credit balance.
  •         To check whether the individual can repay debts.
  •         To check the individual’s past record and credit history.
  •         To evaluate how much loan amount to provide and decide the applicable interest rate.

Factors that influence the CIBIL score

Several factors influence the CIBIL score and it is always important to be on the high side. If you are planning to get a loan, you should be aware of the common factors that disturb credit score and monitor them regularly.

Factors affecting the CIBIL score are as follows:

  •         Any lapses, delays or defaults in last credit repayment
  •         Your previous credit repayments
  •         Your existing debts
  •         Your income
  •         Rejections for loans you recently applied for

Does outstanding debit disturb your credit score?

Yes! The outstanding debit badly disturbs the credit score. Most lenders check through the credit utilization ratio. It means the sum you are utilizing out of the entire credit allotted to you. If the ratio is higher, the credit score will be low. It does not exactly mean that debt is bad. However, you need to maintain a good credit score especially when you have taken a debt. The best tip to handle this scenario is paying off the loan at the right time and not exceeding the limit of bank accounts or credit cards.

Reasons why unsettled debt is bad for credit score

  1.   Due to outstanding debt, repayment of new loans will be difficult
  •         If the individual has some outstanding debts, then he/she has to pay a large sum as just EMIs.
  •         When the person borrows additional loans along with their outstanding debts, then it becomes a large repayment burden. It can also create individual bankruptcy.
  1.   It maximizes an individual’s credit utilization ratio
  •         A credit utilization ratio of about 30% or less is recommended and said to be good.
  •         If the ratio is high, it means the individual is utilizing too much credit. As a consequence, it can reduce the individual’s credit score.

Good credit score to obtain a personal loan, business loan and home loan

If an individual wishes to get a personal loan or business loan, then he/she should maintain a CIBIL score of at least 700 or 750 according to the lender. When you have this score rating, it improves the chances of approval of personal loan applications. For a home loan, the score should be above 650.

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