While taking loans to meet one’s smallest needs was considered uncommon for previous generations, Indians today are far more willing to borrow from a trusted lender. A recent survey by Home Credit India has shown that more than half of Indians are open to taking a loan to improve their lifestyles. These include availing loans for essential purchases such as buying a home to purchases such as smartphones and laptops.
However, even as availing loans becomes common and more convenient, a potential borrower must have a good sense of his or her CIBIL report at all times. Your CIBIL report, specifically your CIBIL score, can be the deciding factor between whether you can avail the loan of your choice or not.
A simple way of checking free CIBIL score is to get your customised Financial Health Check Report (FHCR) on Finserv MARKETS. Apart from various useful information about your financial health, Financial Health Check Report (FHCR) also provides your free CIBIL score, at no extra cost.
Your CIBIL report and your free CIBIL score is a reflection of your financial reliability and determines your creditworthiness with financial institutions. Which is why it is crucial to have an adequate understanding of the components that go into your CIBIL report, what they mean and how you can ensure your score remains favourable.
Understanding the CIBIL report
The Credit Information Bureau India Limited or CIBIL is widely considered the most trusted Credit Bureau in India. It generates and maintains monthly reports of an individual’s credit history and payments regarding loans and credit cards. This is known as an individual’s CIBIL report and is shared with banks and financial institutions. This report is crucial, as it forms the basis for them to decide whether to accept or reject an individual’s loan application.
In order to properly understand your individual CIBIL report, you must familiarise yourself with its various sections. Most of the information available in your CIBIL report can be condensed into five different components:
1. Personal Information
This details all the personal points of information you share with your lender, which they in turn share with CIBIL. This includes your name, date of birth, PAN number, passport information, driving licence and so on.
It also includes your contact information as well as information about your employment and income. For this section, it is important that you ensure the information detailed is accurate and up to date to avoid complications.
2. Account Information
This section contains all the details about any ongoing loans or credit cards you might currently have. This includes details about the type of credit availed as well as information about the lender.
It also includes information about your loan amounts, details of your account with the lender, details about your overdue payments as well as your recent payment history. This is possibly the most important aspect of your CIBIL report, so if any information seems incorrect, make sure to resolve it swiftly.
3. Credit Enquiries
Another important aspect of the CIBIL report is the section detailing enquiries made by financial institutions about your credit score. Details can include the size and type of loan requested. This is significant, because if this section shows a history of asking for excessive credit, future lenders might become less inclined to approve your loan.
4. Your CIBIL Score
Lastly, your CIBIL score is without a doubt the most crucial aspect of your CIBIL report. The CIBIL score for an individual can range from 300 to 900. The higher your CIBIL score, the more likely it is for your loan application to get accepted. On the other hand, a low CIBIL score might lead to higher interest rates or even loan rejection.
This is because your free CIBIL score is calculated by factoring a few important points of information. This includes your history of repayment, high credit utilization, mix credit and multiple enquiries.
Ideally, you should strive to keep your free CIBIL score in the range of 700 to 800. This can be achieved by paying your loan EMIs and credit card bills on time, not accumulating a large amount of debt, and spending wisely. Anything below 500 is generally considered a poor CIBIL score to have. Delayed payments and frequent defaults can keep driving your score lower, so make sure to avoid such practices.
One of the most effective ways to achieve this is by checking your CIBIL score for free regularly. Apart from free CIBIL score, you can also analyse your overall financial health with a comprehensive Financial Health Check Report (FHCR) at Finserv MARKETS.
At Finserv MARKETS, you can get access to a complete Financial Health Check Report (FHCR) personalised according to your credit profile. This not only includes checking your CIBIL score online for free, but also a breakdown of this score and a summary of your clean and defaulted accounts. Moreover, the assessment of this report can help you chart your finances and make better decisions with respect to your credit history.
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