Your CIBIL Score is a numerical representation of your borrowing habits. The CIBIL report will include the debts you have taken, how you have repaid them, the type and age of your credit accounts, any negligence etc. It covers every minute detail of your credit history. <\/p>\n\n\n\n
When evaluating your loan application, banks usually look for a Credit Score of 700 and above, which indicates that you are a reliable borrower. On the contrary, banks will refuse to give you a loan if you have a poor Credit Score (commonly 300 or lower on CIBIL).<\/p>\n\n\n\n
Most Indian banks consider several factors of your financial portfolio during a loan process. CIBIL score<\/a> is one of the most important parameters that help them determine your eligibility for a loan because it indicates your creditworthiness. If the CIBIL score is on the lower end of the prescribed range, it indicates that the borrower is unreliable and may default on loan EMI payments in the future.<\/p>\n\n\n\n The advancements in the internet have made it possible for prospective borrowers to check their CIBIL scores and reports without any hassle. The Credit Information Bureau of India Ltd. has a dedicated website where everyone can check their CIBIL scores and reports. The Trans Union CIBIL website charges a nominal fee for it. Other websites such as Bankbazaar.com<\/a>, and Policybazaar.com allow people to check their CIBIL score free of cost. Oolka, an Indian credit profile not only helps you to check your credit score for free but also build stronger credit profile by looking at your credit portfolio. This can help you to plan your finances better. Besides these websites, one can check their CIBIL score on all the prominent UPI apps.<\/p>\n\n\n\n If you are going to buy a vehicle, you might apply for an auto loan. The amount you will have to pay back is determined by several factors, including your income. Most lenders offer up to 90% of the vehicle’s invoice value as a loan. Although there is no minimum Credit Score requirement in this case, it is recommended to have a CIBIL Score <\/strong>of at least 700 if you are applying for a car loan. You would still be able to get the loan if you don’t have a Credit Score of 700; however, the interest rate of that loan will be on the higher side. This way, you may end up paying a lot of money in the long run.<\/p>\n\n\n\n There is already a high interest rate for personal loans as they come under the category of unsecured loans. Under this, there are no restrictions on how the loan should be used. That means you can spend that money on your child’s education, on a dream vacation or for any other personal need. Since you are applying for an unsecured loan, you don’t need to provide any assets in the form of security to hedge the risk. Here, there is no specific CIBIL Score value that you will have to achieve before applying for a personal loan<\/a>. That being said, since the lender is providing you money solely based on your good CIBIL Score, the higher the CIBIL Score, the better the chances of your loan application getting approved. If you have a low CIBIL Score, the bank may still grant you a loan, but at an excessively high interest rate.\u00a0<\/p>\n\n\n\n If you wish to purchase your dream house, you will have to apply for a mortgage loan. You may also apply for a loan against an existing property. You may be provided with a loan of up to 80-85% of the property’s worth. A variety of factors such as the location of the property, the city, the current interest rates etc. are taken into consideration while determining the interest rates. Apart from these variables, your CIBIL Score plays a crucial role in getting your home loan approved. <\/p>\n\n\n\n Generally, having a secure score of 750-900 is ideal for lenders to approve your loan application. This demonstrates that you have exercised financial restraint while making your debt payments. Any score between 550 and 700 suggests that the borrower carries some risk, but is still eligible for getting the loan approved. However, if you have a CIBIL Score between 300 and 549, chances are lenders will point-blank reject your loan application. A Credit Score in this range indicates that the borrower is a risky customer and the probability of failing to repay the loan is high. <\/p>\n\n\n\n Nowadays, there are many ways in which individuals can access their CIBIL score, to understand the dip in CIBIL score, one must scrutinise the credit report. Credit reports include a clear breakdown of your credit profile, unpaid\/overdue bills and lapsed loan EMIs if any. This will help you fill the gaps and plan your finances which will eventually lead to an improved CIBIL score.<\/p>\n\n\n\n If you own a credit card or have borrowed loan, it helps to set up auto payments for the credit card bills and loan EMIs. In this way, you won\u2019t have to remember due dates. You can also mark your calendar if you haven\u2019t set up auto-payments.<\/p>\n\n\n\n Look for any unpaid credit card bills and loan EMIs. See if you have consecutively missed multiple due dates and repay the pending amount at the earliest.<\/p>\n\n\n\n If your debts are larger than your income, your debt-income ratio will cause a dip in CIBIL score. Hence, ensure that you don\u2019t max out your credit card often. <\/p>\n\n\n\n Credit utilization indicates how much of the credit amount you have used. Experts recommend that card owners can use upto 30% of their credit limit. Anything exceeding that amount will raise a red flag, thus impacting your credit score badly.<\/p>\n\n\n\nHow to check your CIBIL score before applying for a loan?<\/h2>\n\n\n\n
Let\u2019s discuss the impact of CIBIL score on different types of loans.<\/h2>\n\n\n\n
For Auto Loan Approval <\/h3>\n\n\n\n
For Personal Loan Approval <\/h3>\n\n\n\n
For Home Loan Approval<\/h3>\n\n\n\n
Steps to improve your CIBIL score before applying for loan<\/h2>\n\n\n\n
Study your credit report thoroughly<\/h3>\n\n\n\n
Keep a track of due dates <\/h3>\n\n\n\n
Repay old payments<\/h3>\n\n\n\n
Balance your debt-income ratio<\/h3>\n\n\n\n
Restrict credit utilization<\/h3>\n\n\n\n