As they say, the world is full of opportunities, and in this world of opportunities, you cannot take time to take any decision regarding anything. This is the fast-moving world you, so you have to make decisions as soon as possible. This applies to everything in this world such as life decisions or business opportunities.
Money plays an important role while taking a lot of decisions. And too easy out while taking any decision-taking loan plays an important role. And your CIBIL score which is your trust score determines how much you can be trusted as a borrower. That it is very important for you to improve your credit score for better opportunities and good trust.
What is CIBIL score?
A CIBIL score is a 3 digit credit score of any borrower, which ranges between 300 – 900. For a thumb rule higher the number, the better it is. For example, a CIBIL score of 720 is lower than 790.
Your credit score is calculated after considering several factors such as credit type, repayment of your credit, any delayed payment, age, etc.
CIBIL score is a whole history of your behavior of borrowing and returning the money to a bank or NBFC. It is directly linked with your PAN card and anyone with your Pan Card number and other details can check your credit score.
As for the industry standard by the majority of banks and non-banking financial companies. 750 or higher CIBIL score is preferred for any Loan or Borrowing of money.
Importance of CIBIL score
As you know that CIBIL score is your behavior after taking any Credit. So It is obvious that it will have a lot of importance for your finances. so let’s take a deep dive and learn about it.
Faster application process
For people who have a higher CIBIL score and apply for a loan or a credit card in any bank or non-banking financial institution, their application moves faster than any other person who has a low credit score.
Cheaper interest rates
People with higher credit scores get loans at very cheaper interest rates. Because the bank which is lending the money have trust in you, due to your higher credit score.
Better deals on Credit cards
If you have a higher CIBIL score you will get better deals on credit cards than anyone else. Because every credit card company wants good customers whom they can trust with their money.
Higher Limits of Credit Cards
Those who are looking for higher credit card limits are advised to keep their credit score at higher numbers such as more than 800. With this bigger limit, you can easily get loans on your credit card at a much faster speed.
When you apply for a credit card or loan from any bank or non-banking financial institution they charge processing fees and other kinds of charges on your application. You can dodge these charges by having a higher credit score and banks will be happy to let it go.
Bonus: Early detection of identify theft
Early detection of identity theft is one of the most important things when you regularly check your credit score. Because it shows you all of your credit history including any ongoing loans etc. And if you are a victim of identity theft and someone took a loan on your details you can stop that from happening and report that crime.
Factors that can affect your CIBIL Score
Because CIBIL score is a sensitive thing for your credibility. There Are multiple factors that can affect your cibil score. So let’s take a deep dive into it.
Delay in installment
It is very important for your credit score that you should never delay your installment of any loan or credit card. Because even a single-day delay in your installment can hurt your cibil score.
Credit Card Utilization
Higher credit utilization can also impact your CIBIL score. As per the experts of the industry you should not exceed 30% of your overall credit limit. But these days overall Utilization of 50% of the overall Credit limit can be neglected.
Outstanding debt of your previous loans or credit card can impact your cibil score at a very high level. so whenever you’re applying for a fresh application you should always clear your previous debts.
Multiple credit applications
Even just submitting a hard inquiry to check if you can get a loan or credit card at multiple banks at the same time can also hurt your credit score. Because it shows that you are in an emergency and credit-hungry.
Closing old credit cards
When you close your old credit cards the history of your credit automatically gets closed with it. So it is always advised to keep your old credit cards working because they are a great source of credit score.
No mixing different credits
There are two types of credit first is secured credit and 2nd is unsecured credit. to keep your simple score at a higher level it is always advised to mix up both types of credit. your credit cards are unsecured credit and your home loan or auto loan are secured types of credit.
Tips to increase your CIBIL Score
As you know that CIBIL score or credit score is the behavior of your overall credit history and repayment including various factors. And many things are in your hand to increase your CIBIL score. Let’s take a few tips into consideration.
Never Missing Repayment
Every expert related to a credit score will suggest you never miss repayment of your loan or credit card. Because one missing payment can change the whole scenario of your credit score. And it also gives a sense to your credit bank that you are not a responsible person when it comes to repayment. And you are not in fear of default.
Error in Report
Any kind of error related to your credit history can impact your credit score. By the error, I mean that what if even after paying your loan, the related bank has not issued any NOC, and the loan account is not closed completely. Even though it is not your fault but still because it is in your account it will affect your credit score.
Mixing of Credit
You should always try to mix your secured credit and unsecured credit to give a better understanding of your financial health. Credit cards and personal loans are included in the unsecured loans and home loans, auto loans are included in secured loans. By mixing your credit you give a sense of security to your creditor that the loan will be paid on time as you have a number of assets.
Not having any joint account
Those people who have Any joint account are at higher risk of getting their credit score punished. Because if your joint account holder partner did anything related to hurting its credit score. It may impact your CIBIL score too.
Not being a Guarantor
Being a Guarantor in any loan can also hurt your own credit score if another person didn’t pay his dues on time. Even experts related to credit scores advise that you should never become a guarantor in any loan.
Paying dues before Due date
If you pay all of your dues such as a credit card or loan before the due date can significantly improve your credit score. And new lenders will also get a sense of maturity when it comes to repayment.
Credit against FD
Credit card against your fixed deposit or having secured cards can increase your credit score or CIBIL score significantly. Because it is a clear indication that you have many assets and your behavior in terms of money is very good.
Increasing Credit card limit
Whenever you bank with whom you have a credit card ask you to increase in credit card limit, you should happily accept that. Because you can keep your credit card utilization at low such as 30% which is advised by the experts.
Never paying partially
Many times we people pay part of its credit card dues or loan installment. And roll over the dues for the next payment cycle. But let me tell you this practice of rolling over and paying partially can hurt your CIBIL score significantly even though banks love this practice.
Even though everyone wants to increase their CIBIL score as soon as possible. But time also plays an important role in your credit score. Because the older the credit account you have higher the credit score you get. With just one condition attached, not defaulting in between.
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I think with my writing you now understand what is a CIBIL score and how much it can impact your life. We have also attached a few tips and tricks to increase your cibil score. There is no fast or slow way to increase your CIBIL score. There is only one way and that is not defaulting.