CIBIL score is a three-digit number that evaluates your credibility. It ranges between 300 and 900 and is computed by the TransUnion CIBIL bureau after considering various factors.
- 1 ∙ Repayment history
- 2 ∙ Credit exposure
- 3 ∙ Credit duration and type
- 4 ∙ Other important factors
- 5 What is the preferred CIBIL score you must have?
- 6 How can you remove your name from the CIBIL defaulters list?
- 7 How can you check your CIBIL score through the online route?
- 8 How can you review your CIBIL score using a PAN card?
- 9 How to improve the CIBIL score immediately?
∙ Repayment history
Repayment history is one of the major criteria that can impact your credit score in a negative or positive way. If you repay your outstanding dues linked with your loan and credit cards, it will enhance your credit score. And if you fail to make payments or miss out on your repayments, your credit score will fall. Hence, such repayment behaviour must be avoided to keep your credit score high.
∙ Credit exposure
Credit exposure, also called CUR (credit utilization ratio), is the next major parameter that impacts your credit score. CUR is the credit amount utilized by you in proportion to the provided credit limit. According to experts, you must ideally use up to 30 percent of your overall credit limit. A high CUR suggests you have a credit hungry nature and are struggling hard with your finances. As an outcome of massive credit usage, lenders can think you have a high risk indicating that you may turn into a loan defaulter. This results in application rejection.
∙ Credit duration and type
Having a long history of credit shows that you have great experience in managing your credit. Credit history is the number of years passed since you availed of your first credit account. Thus, it is recommended to begin forming your credit history at a very early stage because it comes in handy when you plan to purchase a home or car in future and requires higher loan proceeds.
Kind of credit is also factored in when computing your credit score. It is crucial to maintain a good balance between unsecured and secured loans. When you have secured and unsecured loans in your report, it states that you hold a good experience in managing both kinds of credit.
∙ Other important factors
The next crucial factor that forms a part of CIBIL score calculation is a hard inquiry. When applying for credit like a credit card or loan, lenders fetch your CIBIL report from the bureau. Such inquiry is known as a hard inquiry, and several such inquiries have a negative impact on your credit score. You must avoid applying for multiple credit lines simultaneously.
It must be noted that your credit score is one of the major parameters considered by the lenders when disbursing your credit application. Thus, you must take the required measures to maintain a good credit score. Presently, there are various lenders who provide preferential pricing to consumers with a good CIBIL score. With an excellent credit score, you get the power to negotiate for better credit card and loan deals and avail of lower rates on loans.
What is the preferred CIBIL score you must have?
The CIBIL score preferred by the lenders is 750 and above. Thus, holding this score helps you avail of better loans and credit card deals.
How can you remove your name from the CIBIL defaulters list?
You must remember that CIBIL will not publish the defaulters’ list. However, if you are a loan defaulter, then it will be reflected on your CIBIL score and even on your report. A low credit score means you are less likely to avail of loan approval from NBFCs and banks. If any delayed payment or payment default is mentioned on your credit report, then this will impact your chances of availing of a loan.
How can you check your CIBIL score through the online route?
Step no. 1: Approach the online website: https://www.cibil.com/creditscore
Step no. 2: Choose the ‘get your credit score’ option. Then, you must click on the ‘Check my CIBIL score option’.
Step no. 3: Choose your subscription product.
Step no. 4: Type your identity proof details.
Step no.5: Choose the ‘proceed to payment option.
Step no. 6: Make the payment for it.
Step no. 7: Your CIBIL report will be sent to your mail.
How can you review your CIBIL score using a PAN card?
Step no. 1: Approach the official CIBIL site
Step no. 2: Type your PAN card info
Step no. 3: Select the submit option
Step no. 4: Choose the proceed to the payment option
Step no. 5: Make the payment for the same
Step no. 6: Your report and your credit score will be sent to your mail
How to improve the CIBIL score immediately?
There is no way to improve the CIBIL score immediately. CIBIL score improvement takes time. Thus, you must be patient.
∙ Use your credit in a responsible manner
You must repay your amount borrowed from the lender without or with interest based on the credit line type and as per your repayment behaviour. So, do not borrow more than your repayment capacity. Use the loan amount, your credit card, or any other kind of borrowing in a wise manner.
∙ Avoid late or any missed payments
Besides being charged the late payment fees, your repayment behaviour will also be reported to credit bureaus, and this will impact your credit score. In case you have multiple loan EMIs and credit card payments, it is recommended to set up your due date alerts and payment reminders to become highly organized.
∙ Maintain a low CUR (credit utilization ratio)
You must not surpass 30 percent of your overall credit limit. It is particularly important if you place an application for a home loan. When applying for a home loan, lenders evaluate your DTI (debt to income) ratio. This ratio assesses your overall debts regarding your overall income. If your debt surpasses 50 percent of your income, lenders are likely to turn down your loan application.
∙ Ensure to close accounts
If you have defaulted on your payments previously, it gets reflected in your report, which brings down your CIBIL score. Thus, ensure to pay off all your unpaid dues and then close them in place of choosing the settlement option. Note that on choosing the close option, while your score will be lowered a little, it will improve as and when you follow a good credit habit.