5 Things To Get You Closer To An Ideal CIBIL Score
Your credit score or CIBIL score is a significant factor in deciding whether your loan will be approved or not. Credit scores are not earned or tarnished overnight. They are determined on the basis of your credit history, including your payment patterns and past credit taken by you.
A high CIBIL score indicates that you have a strong creditworthiness, whereas a low credit score represents a poor creditworthiness. Moreover, a low CIBIL score brands you as a risky borrower to lenders and thus makes them doubtful to provide you with loan.
What is an ideal CIBIL score?
Although, there is no specific bad or good credit score, lenders hesitate to give loans, such as home loans, to people with a score of 700 or lower. Generally, lenders prefer a CIBIL score of 750 or more for unsecured loans, such as a consumer loan.
- 750 to 900: If you have a credit score anywhere between 750 and 900, then it indicates that you have an excellent credit score, which shows that you have unblemished and consistent record of previous repayments. You can get loans at competitive interest rates from many banks. Plus, you can easily get secured loans, like car loans and home loans, and unsecured loans, like personal loans and credit cards.
- 700 to 750: If you have a CIBIL score between 700 and 750, then it is a fairly good score, which shows fair past loan repayments. You can easily get secured loans from many banks as per your eligibility. However, banks may conduct more analysis before they offer you unsecured loans.
- 550 to 700: If you have a credit score between 550 and 700, then this represents low score, which reflects irregularities or delays in past repayments. Lenders will not give you loan without conducting a credit check on you. Moreover, you have to pay higher interest rates and even if you get the loan, it would be at high collateral and low loan-to-value ratio.
- 300 to 500: If you have a CIBIL score between 300 and 500, then it is a very low score, which indicates many irregularities or over leverage in repayments. You would find it really hard to get a loan from reputable creditors and financial institutions. Moreover, your credit report will display settlements, delayed repayments, or write offs.
5 things to do to get an ideal CIBIL score
In order to improve your credit score, you can follow these tips.
1. Make timely payments
Make sure that you pay your credit card bills and loan installments on time. This also includes other payments, such as insurance premiums. Even if you miss one payment, your credit score can diminish.
2. Opt for good debts
Instead of going for ‘bad’ debt, choose ‘good’ debt. Student, vehicle, and home loans come under good debt as they are secured loans, whereas lots of personal loans and credit cards are considered unsecured loans, which can in turn bring down your CIBIL score.
3. Persistence and Time
Rome was not built in a day and nor will your perfect credit score, so no matter your situation: START NOW! Your CIBIL score improves when you have more logged on-time payments and with each passing year you have a credit card account in good standing.
4. Get a mixture of credit
Go for different types of credit in order to increase your credit score. Take both secured and unsecured loans, but do not take too many unsecured loans, including credit cards and personal loans.
5. Do not borrow too much
Make sure that you borrow according to your requirements. Do not apply for too many loans or max out your credit cards, as this can affect your CIBIL score by displaying a credit hungry behavior. Only take a loan when you absolutely require it and do not draw near the limit of your credit card.
When you practice these things regularly, you can achieve an ideal credit score of 750 or more. Moreover, a responsible credit behavior and good history of timely payments can boost your credit worthiness.