Aditi Ahuja
by on January 8, 2019
When you apply for a loan from a bank or an NBFC, the approval or rejection of your application is dependent on your credit-worthiness. The lending institutions check your credit score from the records maintained by the Credit Information Bureau (India) Limited (CIBIL). CIBIL is the credit bureau that collects and maintains information related to the loan and credit card payment history of individuals and commercial institutions. A good credit score makes it easier for you to procure loans from lending institutions. cibil score What is a Good CIBIL Score? A CIBIL score is a 3-digit number that is generated based on your credit payment history. It is a reflection of the credit-worthiness of individuals and commercial institutions. The CIBIL score falls between the range of 300 and 900. A score that is closer to 900 is considered to be good. Higher the credit score, better is your chance of availing future loans. A good CIBIL score can also help you negotiate with lending institutions for better interest rates and more favourable terms. Tips to maintain a Good Cibil (credit) Score Here are a few tips that can help you to generate and maintain a good credit score: Keep track of your Credit Score Considering how important your credit score is for access to finance, it is important for you to periodically check your credit score. If your credit score is low, it is better to avoid applying for any loans in the immediate future. You need to ensure that there are no discrepancies in your credit record and all payments have been duly reported by the lending institutions. Full and Timely Payments Delayed payments and default on payments can have a negative impact on your credit score. If you want to maintain a good credit score you need to ensure that you make your credit card and EMI payments on time. Instead of making the minimum payment, pay up your credit card dues in full. Do not appear to be Credit Hungry If there are many credit inquiries from many lending institutions in your credit record, it conveys the message that you are desperate for credit. This can have a negative impact on your credit score. Avoid applying for too many loans from various lending institutions simultaneously. If your credit score is not looking too good, give yourself some time and work on your credit record before you apply for any loan. Maintain a Healthy Credit Mix Secured loans like home loans have a positive impact on your credit since the home appreciates in value over a period of time. Unsecured loans like personal loans and credit card debts can have negative impact on your credit score. It is important to maintain a healthy credit mix in order to maintain a good credit score.

Additional read: How to improve CIBIL score immediately?

Maintain your Credit Utilisation Ratio If you have a tendency to max out your credit card, your credit score is likely to be poor. Ideally, you should keep your credit utilisation ratio at 30-40% of your credit limit. This will ensure that you maintain a good credit score and have the possibility of availing loans on more favourable terms.
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