TransUnion CIBIL is the leading credit bureau or credit information organisation. Such institutions generate the credit information report of every borrower. A CIBIL score can be either high or low and, in some cases, a credit score can be negative. For such instances, there are few ways to improve your CIBIL score.
What is CIBIL score?
A credit score or CIBIL score is a 3 digit numeric expression of an individual’s credit or financial history. This method is used by financial companies to determine the creditworthiness of an applicant while offering their financial products. In other words, with the help of a credit report generated by the CIBIL score, a lender can anticipate the repayment capability of a borrower and avoid potential risks of lending.
5 Tips to Improve CIBIL Score
There are a few easy steps to improve your CIBIL score, to avail a better personal loan offer. They are–
- Check your credit report
The initial step towards improving a borrower’s credit score is to avail a copy of their credit report. As a credit report is comprised of the history of transactions made by an individual, it will show any inaccuracy. If there are any mistakes, an individual can show their report to the bureau and rectify the error.
- Credit card balance utilisation
To improve credit score, an efficient way is to reduce the usage of a credit card. An individual can obtain a personal loan instead of utilising credit extensively from the card. For borrowers with zero credit score, they can easily avail a secured credit card against a security, such as a fixed deposit. With regularised usage of such credit cards and timely payment of debts, you can improve your CIBIL score.
- Keep old credit accounts open
Another way to hold a high CIBIL score is to keep old credit debts open. This way, a potential lender can anticipate the repayment capability of the borrower as per the financial behaviour of the individual while maintaining such cards.
- Timely repayments
Regular payment of debt increases the user or borrower’s credit score. Late payment or default negatively affects the credit score and can lead to an endless cycle of debt. Routine and on-time payments of loan EMIs or credit card bills show an individual’s responsible financial behaviour. Lenders are more inclined to consider such individuals less risky while offering credit-based financial products.
- Mixture of secured loan and unsecured loan
A healthy mixture of secured and unsecured loans can help you improve your CIBIL score. While a secured loan utilises an individual’s pledged or mortgaged asset value, an unsecured loan like a personal loan reflects his/her financial behaviour and responsibility. Routine payment of such loans simultaneously can increase the individual’s credit score for personal loan or for any other loan.
Why is the CIBIL score important?
The CIBIL score ranges from 300 to 900. To obtain an instant personal loan, a borrower may require a score around or above 750. Hence, a high range of CIBIL score is required to attain a loan. Every lender evaluates the credit report of the borrower to understand the creditworthiness of the individual. It also determines the credit amount an individual is eligible for. For such reasons, the CIBIL score is important for personal lending.
Every loan comes with a repayment schedule. An individual can check their estimated EMIs online via calculators offered for complimentary usage only by leading lenders.
Organisations like Bajaj Finserv provide easy interest rates and other borrower-centric benefits like flexible repayment tenor, easy to meet eligibility criteria, etc. They also provide pre-approved offers that ease the process of obtaining credit and save time. These offers are available on both secured and unsecured loans including advances like home loans, personal loans, business loans, etc. You can check your pre-approved offers by sharing a few important details online.There are various methods to boost your CIBIL score. By improving the score, an individual qualifies to avail a better loan. Maintain a high score to avail personal loan and other financial products at the most repayment-friendly loan terms.