If you are planning to take loans from banks or non-banking finance companies (NBFCs), you should have a good CIBIL score for easy approval and low interest rates. CIBIL score shows a person’s credit discipline and his or her credit history. Here is 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 that ranges between 300 and 900. The higher the score, the better. Generally, a score above 750 is considered good, where the chances of loan approval increase. A report containing this score is called a CIBIL report.
A CIBIL report allows the bank to see the credit history of a person, including whether the person has ever defaulted on any of his/her previous loans. It also shows how many loans the person has taken so far, including the amount and duration of previous credits. This helps banks to mitigate the risks of defaults and hence reduce losses.
Importance of CIBIL Score
If you are going to take a loan or apply for a credit card, the bank will check your CIBIL score to ascertain your creditworthiness and risk profile. A CIBIL report allows the bank to see your credit history, including whether the person has been punctual in repaying his/her previous loans. It also shows how many loans the person has taken so far, including the amount and duration of previous credits. This includes both credit cards and loans. This helps banks to mitigate the risks of defaults and hence reduce losses.
Bank approves loan only if your CIBIL score is good. So, maintaining a good score is very important. Score saves individuals from any paper hassles to prove records of previous credits. Banks offer cheaper loans to those with a good CIBIL score.
How to Check CIBIL Score Online?
CIBIL provides a report once a year free of charge. It can be checked online. You can check CIBIL score by following steps:
1) Go to official CIBIL website https://www.cibil.com/
2) Select ‘Get your CIBIL Score’
3) Click ‘Click Here’ to get your free annual CIBIL score
4) Type your name, email id and password. Attach ID Proof (Passport Number, PAN Card, Aadhaar or Voter ID). Then enter your pin code, date of birth and your phone number
5) Click ‘Agree and Continue’
6) You will get one time password (OTP) on your registered mobile number. Type the OTP and select ‘Continue’
7) Select ‘Go to Dashboard’ and check your credit score
8) You will be redirected to myscore.cibil.com website
9) Click on ‘Member Login’ and once you log in, you can see your CIBIL score.
How to improve CIBIL score and maintain it?
Maintaining a good credit score is important for getting a loan or credit card from any bank. Here are some important tips:
1) Credit utilization ratio should be limited to 30 percent for good CIBIL score. If you are struggling to stay within the card’s existing limit, it is advisable to get a credit card with a higher upper limit.
2) Loan repayments or credit card balances have a very big impact on your CIBIL score. Therefore, any loan or credit card dues should be repaid within time to maintain a good CIBIL score.
3) It is better to diversify the loan portfolio with a good mix of secured and unsecured loans to get a higher CIBIL score. A credit card is an unsecured loan, while a home or auto loan is a secured loan.
Read all Latest Business News Here