Your CIBIL Score maybe getting you down – One of the first things used to check a person’s eligibility for any type of loan is the individual’s credit score. In India, a credit score is also known as the CIBIL score. This is essentially a three-digit number that summarizes your entire credit history and is provided by the Credit Information Bureau (India) Limited, or CIBIL. This score ranges from 300 to 900, and scores over 750 are considered favorable. The higher your score, the more financially sound and responsible you are deemed by your credit provider. Having a good score shows that you can repay loans in a timely fashion.
Your credit score is even more important when taking an unsecured loan like a personal loan. Your score shows lenders whether you’re a responsible borrower or not. But your CIBIL score doesn’t only affect your ability to take out a loan. Let’s look at a few other scenarios in which your credit score might be affecting your day-to-day life:
We already know that a low credit score could give lenders a reason to reject your loan application, but this isn’t the only aspect of the loan process that is affected by your score. When you apply for a loan and your score is slightly less than favorable, the lender might still approve your application, but with a much higher rate of interest. Lenders do this as a means of compensating for the risk that they are exposing themselves to.
Credit Card Applications
A low credit score could spell bad news for individuals who are looking to apply for a credit card. Borrowers may either reject applications entirely, or provide cards with fairly low credit limits to those individuals that they consider as “highly risky.
As more and more millennials are opting to rent houses, homeowners have decided to take a few precautions to ensure that their monthly rent is paid on time. Landlords have started asking individuals to produce their credit history before deciding whether or not they should let out their house to the concerned individuals. Needless to say, a bad score will lower your chances of getting the house you want, or could even increase your monthly rent.
Credit scores are no longer limited to loan and credit card applications. A number of firms in the banking and finance space will ask potential candidates for copies of their credit history before deciding whether or not to grant these individuals an interview. This could mean that even the most qualified individuals could get turned away from the job of their dreams due to a bad repayment history.
How do I improve my low CIBIL Score?
Now that you’re aware of all the ways in which a bad credit score can affect your life, it’s important that you try to do something about it. You can take stock of your finances and try and clear all your outstanding debts as quickly as possible to improve your score. If you have any EMIs, make sure you pay them on time.
Also Read: 8 Habits for a High Credit CIBIL Score
Another way to increase your score is by filing your taxes on time and building up a steady income portfolio. If you’re trying to build up your score, it’s important that you don’t apply for too many loans or credit cards in quick succession, as this is considered to be a red flag by CIBIL and will negatively impact your score. Finally, remember to check your CIBIL score every 6-8 months to ensure that your finances are on track.
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