1. How can I improve my CIBIL Score?
You can improve your CIBIL Score by maintaining a good credit history, which is essential for loan approvals by lenders. Follow these 4 steps which will help you better your score:
The following factors are to be considered in case to improve your Credit Score:-
1. Make all overdue:- It is extremely important to pay your bills on time. This affects 35% of your score. Pay on time, all of the time. Your credit scores can be significantly impacted with just one late payment reported to your credit file.
2. Pay down balances: – If you currently have credit cards and are using more than 30% of your limit then you want to follow this portion of this guide. Pay down high balances that put you over the 30% rule. Stay under 30% and maintain a low balance as mentioned previously. This factor alone is the second biggest impact to your score at a whopping 30% of your score.
3. Pay all EMIs regularly: – Use auto-pay to pay the minimum every month and your scores should continue to improve with healthy, responsible activity.
4. Monitor your credit score: – It is available FREE once a year from Credit Bureaus likes CIBIL, Experian, and CRIF etc. Complete a thorough review of your credit report. You are legally allowed a free copy of your report from each bureau once a year. Look for inaccuracies in balances, payment history, and questionable collections
2. How often should I have to check the Credit Report?
Checking your Credit Score or pulling your Credit report does NOT impact your score. So, you are free to do it as many times as you want. However, as a practice, it’s good to your check your score at least twice a year without fail. Also, it is always good to check your score before you apply for a Credit product, so you can be sure of your chances of approval.
3. Why is my Credit Score important for getting a loan?
The Credit Score plays a critical role in the loan application process. After an applicant fills out the application form and hands it over to the lender, the lender first checks the Credit Score and Report of the applicant. If the Credit Score is low, the lender may not even consider the application further and reject it at that point. If the Credit Score is high, the lender will look into the application and consider other details to determine if the applicant is Credit-worthy. The Credit Score works as a first impression for the lender, the higher the score, the better are your chances of the loan being reviewed and approved. The decision to lend is solely dependent on the lender and Credit does not in any manner decide if the loan/Credit card should be sanctioned or not.
4. Who can see my Credit Report?
Your credit report information is not available to the public and can be accessed only you’re your permission. When you apply for a loan and credit card then your permission is required as the lenders and banks need to investigate the information to determine your creditworthiness and your potential and ability to pay back the borrowed amount.
5. What are the factors that can impact my Credit Scores?
The two most crucial factors that affect your Credit score is your repayment of the loan and how timely you pay your EMIs and card dues. If you are a month late in paying your dues, then your Credit score might drop by 80 points. Next up is Credit inquiries. They can affect your Credit score in a major way. There are two types of Credit inquiries, soft and hard. Soft Inquiries are harmless to your Credit score but the hard inquiries that are often done by lenders before lending money to you can bring a change in your Credit score even if you do not get the loan in the end.
Opening new Credit accounts can or taking new loans also affect but it can be fixed with regular and timely repayments. Lenders evaluate the credibility of the borrower at their own discretion. They may use whichever scores they’d like and measure those scores on a scale that is unique to them. It’s also possible that they may not even consider Credit scores at all but just the contents of the Credit report.
6. If I have a good Credit Score will I get a loan with lesser interest rates / quick approval?
Although lenders look at your Credit Score before considering your loan or Credit Card application, they also look at a number of other factors too, such as your income, employment history and so on. But you can be rest assured that if your Credit Score is good, the chances of loan refusal is low and you’ll get better rates than someone with just an average score.
7. Can Credit Bureau delete or change my records?
Credit Bureau cannot delete or change records reflecting on your CIR on its own; they simply collect records of individuals provided to them by their members (Banks and NBFCs). There are no ‘good’ and ‘bad’ Credit or defaulters lists either.
8. How long does a bad credit rating last?
Debts have a finite duration, and so do negative information that appears on your credit report. All negative information on the credit information after 7 years often start to value less for the credit score. Make sure all your payments and your credit activities are timely and regular to show stability in your credit behaviour and eventually pushing your credit score towards the good side.
9. If I have never borrowed till date what my Credit Score will be?
If you do not own a Credit Card or have never taken a loan till date, then you will not have any credit history to show. And, of course, your Credit Score will be low. Lenders are usually quite apprehensive about lending to credit newbies as there is no way for them to gauge their credit behavior. While we are not encouraging you to borrow unnecessarily, it wouldn’t hurt to get yourself a Credit Card. Having a credit history is extremely helpful for your future.
10. What is CIBIL Score 2.0?
The CIBIL Score 2.0 is a new, updated version of CIBIL Score which has been designed keeping in mind the current trends and changes in the consumer profiles & credit data. Please note, the score displayed on the dashboard is the earlier version. However, the difference in the Credit Score does not impact the credit decisioning during the Loan approval process as both the versions of the score may have a different score eligibility cut off while processing the loan application. Lenders may have different loan eligibility criteria depending on the version they are using. The CIBIL Score 2.0 also introduces a risk index score range for those individuals who have a credit history of less than 6 months. These individuals were categorized under the category of “No History – NH” in the earlier version. The score range is from 1 – 5, with 1 signifying “high risk” and 5 signifying “low risk”.
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If your score is in the “good” range in the chart, you’ll generally be able to qualify for a mortgage loan with a competitive interest rate. The best rates are reserved for top-tier buyers, but the difference in interest rates between good and excellent credit scores may be less than you think.
CIBIL Score Login process
The credit score is a three-digit numeric summary of your credit history, which is compiled from various financial institutions, lenders, and banks. The value ranges from 300-900, where 300 is the lowest score and 900 is the best score.
CIBIL aims to bring in more transparency to the loan approval process in the country, in that customer now have an understanding of the seminal factors which lenders analyse to gauge creditworthiness. CIBIL reports, generated on a monthly basis (as mandated by the RBI), help lenders evaluate and approve or reject loan applications, as the case may be. However, there are several myths associated with CIBIL which need to be busted.
How CIBIL Score Is Calculated?
While each credit information company has its own proprietary algorithm to calculate an individual’s credit score, the most important elements of the score composition are centric around the loan payment behavior of the individual. Your CIBIL TransUnion Score is calculated based on the information in the “Accounts” and “Enquiry” section of your CIBIL Report. The score is calculated based on the following factors – an overview:
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Any individual who has ever been on the credit line gets a report automated in the credit bureau together with information on the repayment timings. When repayments are late or not made at all, it has a negative impact on your credit score.
Bad Credit Score – Side effects
Consider your credit score as the financial scorecard that ranges from 300 to 900. The score is given based on your loan or credit card repayment track of at least 6 months to a year. Any score of 750 or above is considered a good one while a credit score below 600 is considered bad by lenders.