If you are planning to take a loan from banks or non-banking financial companies (NBFCs), you should have a good CIBIL score for easy approval and also for low interest rates. CIBIL score shows a person’s credit discipline and his or her loan history. Here’s what is CIBIL score, how to check, its importance and how to maintain a good score:
What is CIBIL Score?
CIBIL Score is a three-digit number, which ranges between 300 and 900. The higher the score, the better it is. Generally, a score above 750 is considered good where the chances of loan approval become higher. The report containing this score is called CIBIL Report.
The CIBIL report allows the bank to have a look at a person’s credit history, including whether the person has ever defaulted on any of his/ her previous debts. It also shows how many loans has the person taken so far, including the amount and the duration of the previous credits. It helps banks mitigate risks of defaults and hence reduces losses.
Importance of CIBIL Score
If you go to take a loan or apply for a credit card, the bank checks your CIBIL score to ensure your creditworthiness and risk profile. The CIBIL report allows the bank to have a look at your credit history, including whether the person has been punctual in repaying his/ her previous debt. It also shows how many loans has the person taken so far, including the amount and the duration of the previous credits. It includes both credit cards and loans. It helps banks mitigate risks of defaults and hence reduces losses.
The bank approves a loan only if your CIBIL score is good. So, maintaining a good score is very important. The score also saves individuals from any paper hassles to prove the records of the previous credits. Banks also offers cheaper loans to those having good CIBIL score.
How To Check CIBIL Score Online?
CIBIL provides one report without any charge once a year. That can be checked online. Following are the steps through which you can check the CIBIL score:
1) Go to the official CIBIL website https://www.cibil.com/
2) Select ‘Get your CIBIL Score’
3) Click on ‘Click here’ to get your free annual CIBIL score
4) Type in your name, e-mail ID, and password. Attach an ID proof (passport number, PAN card, Aadhaar or Voter ID). Then enter your PIN code, date of birth, and also your phone number
5) Click on ‘accept and continue’
6) You will get a one-time password (OTP) on your registered mobile number. Type in the OTP and select ‘Continue’
7) Select ‘go to dashboard’ and check your credit score
8) You will be redirected to the website, myscore.cibil.com
9) Click on ‘member login’ and once you log in, you can see your CIBIL score.
How to Improve CIBIL Score And Maintain It?
Keeping a good credit score is important to get a loan or credit card from any bank. Here’s are some of the important tips:
1) The credit utilisation ratio should be limited to 30 per cent for a good CIBIL score. It is advised to get a credit card with a higher top limit, if you are struggling to stay within the existing limit of the card.
2) Repayment of loans or credit card dues has a very big impact on your CIBIL score. So, any loan or credit card dues must be repaid within time to maintain good CIBIL score.
3) It is better to diversify the loan portfolio with a good mixture of both secured and unsecured debt in order to get a high CIBIL score. A credit card is an unsecured debt, whereas a home or vehicle loan is a secured debt.
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