Do having a bad CIBIL score worrying you? Worry not ! we’ll try to rescue you to a good CIBIL. We will begin by telling you about CIBIL score and how to improve your credit score. Read on to find out the ways.
Understanding your Credit Score.
Before we get into details, we must first answer the question. What exactly is a Credit Score or a CIBIL score?
CIBIL stands for Credit Information Bureau (India) Limited.
A Credit Score or the CIBIL Score is a three-digit numeric summary of your credit history. The score is derived using the credit history found in the CIR (Credit Information Report). But then, what is CIR?
A CIR is an individual’s credit payment history across loan types and credit institutions over a period of time. Let us rephrase it in simpler terms to give you a better idea. A CIR does not contain details of your savings, investments or fixed deposits. What it does contain is, detailed information on the credit you have availed, such as home loan, automobile loan, credit card, personal loan, overdraft facilities. Simple enough, right!
CIBIL keeps a track of all your secured and unsecured loans and its payments on real time basis with having even the most recent transactions or defaults in its records. It provides this report to banks and other lending institutions on demand basis so they may check your credit worthiness and decide on advancing you a loan.
The credit score normally ranges from 300 to 900. A score above 700 is generally considered pretty good.
How will you find out your CIBIL score?
You can find it online by following a fairly simple procedure. Fill up an online request form available on CIBIL’s website and you’re good to go. Just a few minutes of your time and a nominal amount of fee of Rs. 550 is what it’ll take to know your credit score.
Word of advice from us.
Always obtain your credit report and score personally than through a bank/financial institution. Inquiries from banks and other lenders can negatively affect your score. We don’t want that happening for you! So yes, please spend some time and do it on your own.
Why is your CIBIL score even important?
Now that we have discussed quite a lot about CIBIL scores and finding out the scores, the main question on your mind is, why should you even bother spending time and money on finding out this score? What good is it going to bring you?
Well, lots. Let us state why it is important to know your CIBIL score.
CIBIL is a major parameter in loan application and approval processes. Without a fitting CIBIL score, you may not be eligible for loans. And that is not a position you would not like your home loan application to get rejected. Parameters of CIBIL scores on a scale of 300 to 900 –
More than 700 – Extremely Good
600 to 700 – Moderate
Below 600 – Poor
Whenever you submit a loan application, the banks will look at your CIBIL score and credit report. Needless to say, if you have a low score and a bad credit history, the chances of your application getting approved are low.
So higher the CIBIL score, higher the chances of approval. And this is why you should pay attention to your CIBIL score.
I got my score. I’m not getting desired home loan. How to Improve?
This is a situation where people find themselves in a problem as they now have to work towards improving the CIBIL score to get the desired home or other loan amount. We are listing out very effective ways to improve your CIBIL score to get desired home loan.
1) Current position & scoring pattern –
Know exactly where you stand and set a target on how much you want to improve. We suggest you to take your score above 700, that’s going to get your loan application accepted. Although 700 is good, the closer you get to 900, better it is for you.
Know the scoring pattern as it is of vital importance. CIBIL score has key drivers in past performance of loan payments, exposure to different loans with a focus on unsecured loans and credit cards and your financial discipline.
2) Pay your outstanding loans –
This is a no brainer, right? Timely payment of outstanding loans will reflect well on your image as a responsible applicant. Your credit worthiness is enhanced and so is your CIBIL score. So one very important tip is to close your high cost loans and go towards low cost secured loans. Also, make full payments of the loans you are closing. You should also send the closure report of your loans to CIBIL for timely updation. Part payments are considered an overdue and will not be much appreciated by your bank. Full payments will earn you brownie points! Click here to read about to CIBIL Score and its effects on your home loan application
3) Use your credit card wisely.
Do a thorough cleaning of your credit card. By this we mean, using the credit card in such a manner that you clear off the credit before the due date arrives. Clear any outstanding dues that you may have, it won’t reflect positively on your score. And keep only one, or a maximum of two credit cards in possession. Such credit card discipline will reflect positively on your CIBIL score.
Credit Card dues are a very high interest loan with interest varying between 36 to 40% so paying it on time will improve your CIBIL score and financial health too.
4) Get inaccurate entries in your CIBIL score rectified.
If you find out any incorrect entries in your credit report, you must appeal against them on the CIBIL website and get them corrected. These entries can affect your score adversely, so it is very important to get them rectified in time. Write to CIBIL on email with correcting proofs attached to your mail.
5) Pay your EMI’s regularly.
Prompt payment of equated monthly installments of your past bigger loans on time will help in improving your track record to pay bigger amounts and thereby getting a higher CIBIL score/rating. If it comes to the notice of your banker that you are not very regular in your EMI payments, it is but obvious that your home loan application stands a good chance of getting rejected. So pay your EMI’s regularly and on time.
If you are in genuine problem then it is better to ask bank for a moratorium or loan holiday for some time so your loan doesn’t become NPA (non performing asset) for bank and it is not adversely impacting your CIBIL score.
CIBIL score for Home Loans.
Regrob wants your home loan application process to be smooth and harmonious. We want you to have the house of your dreams and the pathway to acquiring that house be devoid of any hassles!
As mentioned above, a good CIBIL score before you make that application is 700 and above. Take it as close to 900 as you can, we suggest. With a good credit score along with fulfillment of other benchmarks as decided by the bank, you can get financing up to 85% of the total cost of the property.Click here to read about how to uses home loan interest to benefit of tax
Before processing your home loan application, a bank will obtain your credit score and repayment history from CIBIL. Banks will refer to your credit history to determine whether a home loan should be approved or not. Credit scores help banks disburse loans more efficiently by avoiding taking on risky customers thereby reducing defaults. Needless to say, if you have a good CIBIL score and a good credit history, you will be given the amount you require and it’s going to be quick as well.
Final Pointers from us to get your application approved-
Make sure you have a good score before you apply. This is of utmost importance.
Wishing you all the luck on getting the house your heart desires. We got your back on this!