TransUnion CIBIL limited known previously as Credit Information Bureau (India) Limited or CIBIL, was founded in the year 2000. Information regarding timely credit card and loan payments is recorded by the CIBIL body. CIBIL body gets these records on a monthly basis from credit institutions and member banks. Credit scores and Credit Information Reports (CIRs) are provided to lenders in order to help financial institutions. This information is provided to them by CIBIL is for the ease of evaluation and approval for loan applications. For assisting loan providers in managing their business and to play a crucial role in India’s financial system, CIBIL was setup.
Your complete credit history is a three digit number and this number is your credit score. A credit score usually ranges from 300 to 900 and is calculated on the basis of your Credit Information Report (CIR) provided by CIBIL. Loan application and approval process majorly depend on your CIBIL score. You may not be eligible for any sort of loan without a satisfactory CIBIL score. You can either check your CIBIL score online or fill an online score request form on their official website. A nominal fee will be charged and the process is convenient and easy.
Hence, it is important that you should have a strong CIBIL score in order to apply for personal loan, Here are a few ways on how to keep a good CIBIL score.
- Make Payments on Time:
Most of us in today’s day and age have the habit of procrastination and we end up in trouble most of the times. Your credit score will go down if you delay paying your credit card bills or your EMI (Equated Monthly Instalment) for loans. A lender will be fine with one delayed payment, but repeated delay in payment will not be acceptable and hence will affect your CIBIL score.
- Credit Mix:
If your credit has a variety, it is beneficial for you and can do a world of good. Reflection of your credit score can be favourable if you mix your secured and unsecured loans with most loaning firms preferring varied portfolios. However, your portfolio can take a negative route if your examined portfolio has only one type of loan.
- Limit Credit Card Use:
Many times we take multiple credit cards, but how many do we actually use? While some professionals may need multiple credit cards, it may be a bane for others. This is because you will feel like spending more money and only know that you are in debt when you get the bill and also complicates the repayment off multiple credit cards. Hence, if you do not want to find yourself in financial debt, limit using multiple credit cards.
- Peer-to-Peer Platform:
There are peer-to-peer platforms which help improving your CIBIL score. Borrowing from this platform has its own benefits. These platforms allow people with the low CIBIL score and who have a valid reason for the same to enter. There are no prepayment charges for this platform and getting a loan here is an easy process. Hence, this will improve your CIBIL score rating too.
- Using Oldest Credit Card:
‘Unused bank accounts should be deactivated’ is the common notion in today’s world. Also, people are unaware of the effects that is caused on their CIBIL score. A credit card used for a long time and payments that are regularly made to clear the debts are a boon for your CIBIL score. This results in boosting your CIBIL score. Hence, the more you have a credit card with you and make regular payments on it, your credit score will improve.
On the one hand, where banks may not approve your loan if your CIBIL score is below 750, on the other hand, a Non-Banking Financial Company may consider approving your loan. You should follow the above-mentioned points to improve your CIBIL score. An individual’s disciplined repayment and expense behaviour and effective financial behaviour is the key to score a high CIBIL score. However, ideal CIBIL score for any kind of loan is 750.