Introduction of Credit Score
If you have ever had the need to borrow, chances are you have been advised to check your credit score online. It is a bit of fairly common advice doled out to anyone planning for a loan. TransUnion CIBIL (formerly Credit Information Bureau (India) Limited) is India’s prominent credit scoring agency, and you can get a free CIBIL Score Report by registering at the platform, and verifying your identity. Banks check your CIBIL score before approving the loan as well, so it is good practice to get a headstart on that front.
If you are new to the concept of a credit report, and are wondering about the need for a credit score, you are not alone. Potential borrowers are often clueless about how this works, so here’s a brief introduction on the importance of credit ratings and a credit report.
For starters, your credit score is a three-digit number indicating your ability to repay debts or credit. When you apply for a loan or any kind of debt, the lender evaluates your credit score before sanctioning the loan.
CIBIL Score Range
A credit score typically ranges from 300 to 900, and a score of 700 or above is considered decent enough to strengthen your loan application. A higher score means exactly what you think it does: it improves your chances of
- Getting your loan application approved faster
- Getting a better rate of interest of personal loan, or friendlier terms on the loan application.
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What determines your credit score?
Your credit score is calculated based on your history of repayments, the total amount you owe, the length of your credit history, the types of credit instruments and quantum of new credit you have borrowed. Essentially it is important to know that a credit report will just take your credit track record into consideration without chalking in your investments, assets or non-credit related financial transactions.
It is advised that you should check your credit score before you apply, because the credit score reflects your financial standing in terms of debt, and will help both the lender and yourself to manage your expectations in terms of loan approval/rejection
What is a Credit Report?
A credit report is like a report card of your borrowings so far, with details on all your credit accounts, including loans and credit cards. It also contains a credit score assigned to you by credit bureaus, thus giving a grading of your credit history into good, average or bad.
A good credit report will have positive remarks on your credit history, and a credit score of 700 or higher.
Also know the update on CIBIL Score algorithm and how you score gets affected only at Finserv MARKETS
Importance of the Credit Report
If you are going to apply for a loan, you should know that all banks and NBFCs will check your Credit Report before approving your loan or credit card application. And with good reason. They are giving you credit, so they need to be assured that will keep up with your accounts and make timely payments. They will only give out loans to people who have been responsible with their credit in the past.
The benefits of a good credit report may extend to instant approval if your credit rating is great (this includes credit cards!), lower interest rates on the loan offer owing to established credibility, and a better position to negotiate the terms of loan or financing. To a bank, a person with good credit means there is no threat of non-payment. As a result, you can use your record as a low-risk borrower to negotiate for better interest rates, more beneficial repayment plans, higher credit lines, and other benefits.
Remember, it is important to keep up with your report in a timely manner as it gets updated every few months. Always be informed of your creditworthiness and the trend of your credit score. You will also be able to report and rectify any errors in the report timely.
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Steps to Get a Free CIBIL Report
You can get a free CIBIL report once a year, according to mandate. All you have to do is
- Go to the CIBIL website
- Enter a username and password
- Enter your full name, email address, phone number. Press submit.
- Enter your date of birth and PAN details.
- Login after authentication and look through the pre-populated details.
- Once you click submit, you will be shown a dashboard with your CIBIL score, which is also where you can access your credit report.
How to Improve Your Credit Score
After having checked through your score, apply for a Bajaj Finserv Personal Loan to fund a wide range of your financial requirements whether you are planning a vacation or your dream wedding, paying for your higher studies or home renovation, or looking to expand your business. Never worry about rejection again!
Download Bajaj Finance App to check you CIBIl score at comfort of your home.
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