Your credit score is one of the most important factors that determine your creditworthiness, especially when availing a loan. A good credit score will make your loan application process simpler and quicker. It is advisable to have your credit score checked, before applying for the loan application. This is because if the cibil score is less, you can work towards improving it, which will increase your chances of loan approval. To improve credit score it usually takes anywhere from 4-12 months depending on your individual situation. Generally, Credit Score above 750 is recommended. If your score is on the lower end and less than 600, then it will naturally take a while to increase your score to 750.
Your CIBIL score is derived using the credit history found in the CIBIL Report. It is also known as CIR i.e (Credit Information Report). A CIR contains an individual’s credit payment history across loan types and credit institutions. A CIR is most often used by banks and financial institutions to evaluate loans and credit card applications. To understand it better here are some of the purposes of a CIBIL Score.
To fasten the pace of the loan process you need to have a good credit score. It is one of the primary checks done by the lenders when evaluating your credit profile. You could say it is the first financial impression the lender will have of you and it will also help them decide whether you are eligible to avail a loan.
Credit report is very important for lenders to see if they can extend your credit. Also, it helps them decide the loan amount to be sanctioned to you. If the lenders consider that half of your income is used for living expenses, the credit eligibility (Cr) of individuals with existing loans will be half of their income (I) minus current EMI. So Cr = I/2 – EMI. An individual with Rs. 50,000 income and existing EMI of 10,000 may be sanctioned a loan amount for a maximum additional EMI of Rs. 15,000; i.e., Rs. 50,000/2 – Rs. 10,000 = Rs. 15,000.
Banks and financial institutions run a check at your CIR periodically to check your credit health in order to offer better services to you.
Telecom operators keep looking at your CIBIL Score and the CIR to determine the credit limit that can be granted to you if you are a post-paid mobile subscriber.
Also know about FICO Score
The following are some of the important measures on how to improve CIBIL score
You can simply run a check through your credit report and look for any errors and are unnecessarily dragging down your credit score down. It is important to report any error or suspicious activity and get it corrected, this will have an immediate effect on your credit score.
Timely payments of credit card bills and loans will significantly improve your credit score. On the other hand, a payment default will drag the score down. So, start making your payments in time and you'll begin to see improvements in your score.
It is not a good practice to apply for multiple loans or credit cards simultaneously.
When you apply for multiple loans at the same time you are seen as credit hungry in the eyes of the lenders. The lenders start to question your ability to repay the loan which may ultimately result in rejection of your loan application.
Now that you’re well aware of how to increase CIBIL Score, use these tips to improve your CIBIL score and enjoy the various benefits associated with a higher score. Having a good CIBIL score makes it possible for you to avail a loan and get a better deal from a bank.
With Finserv MARKETS you can avail a loan and enjoy various offers like requirements. They also personalized pre-approved offers, instant approval, and quick disbursal of loans. Another simple way of checking your CIBIL score for free is to get your customized Financial Health Check Report (FHCR) on Finserv MARKETS. A Financial Health Check Report (FHCR) will provide your CIBIL score for free, at no extra cost. You can get the most attractive interest rates and complete transparency with no hidden charges on your loan.
Also know the update on CIBIL Score algorithm and how you score gets affected only at Finserv MARKETS
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In order to improve your CIBIL, you can follow the following tips:
● Repay credit card dues on time.
● Limit credit utilization.
● New credit cards.
● Keep a check on your credit report.
● Opt for different types of credit.
● Increase your credit limits.
● Keep old debt on your report.
● Never give a hint of risk.
You can raise your credit score in 30 days by:
● Make a big debt payment.
● Reduce your credit card statement balance.
● Become an authorized user.
● Ask for a higher credit limit.
For most people, increasing a credit score by 100 points in a month isn't going to happen but if you pay your bills on time, eliminate your debt, don't run large balances on your cards and maintain a mix of both consumer and secured borrowing, an increase in your credit could happen within months.
You can increase your CIBIL score to 800 by:
● Dispute errors, even the small ones.
● Pay down your highest balance.
● Pay by your report date, not your due date.
● Keep using your credit cards.
● Ask for a credit line increase.
The longer your history of good debt is, the better it is for your credit or CIBIL score. One of the ways to improve your credit score is to leave old debt and good accounts on as long as possible. This is also a good reason not to close old accounts where you've had a solid repayment record.