Every year, numerous loan applicants in India face rejection primarily because they fail to understand and acknowledge the documents and eligibility criteria to avail loans or credits. One of the first things that a lender checks when you apply for personal loans is your credit score. It is thus vital for every single prospective borrower to check CIBIL score to have an idea about their creditworthiness and what kind of loan terms can be applicable on the loan.
However, apart from learning about your specific score, you must also possess extensive knowledge regarding the workings of this particular scale. Listed below are a few of the things about credit report that you should know.
- What is CIBIL score?
CIBIL refers to the Credit Information Bureau (India) Limited. This is the largest and most reputed credit bureau in the country. It maintains a scale, ranging from 300 to 900 points, that measures an individual’s creditworthiness based on several factors, including loan repayment history, debtor income ratio, financial behaviour, and more.
It is important to understand that individuals who are yet to avail a loan or debt from an NBFC may not have a credit history for financiers to gauge in the first place. In such a situation, availing a personal loan or any other unsecured form of credit can be extremely difficult.
- Why is the credit score important for availing loans?
The credit rating system is greatly useful for both the lender and the borrower. NBFCs can easily gauge the creditworthiness of an applicant when they check CIBIL score for that individual. This system saves the lender’s time and resources, which they would otherwise need to spend on investigating the applicant’s loan repayment history and other factors.
Applicants, on the other hand, can use the ranking system to keep track of their creditworthiness. To avail personal loans in the future, they need to manage their existing debts efficiently. Otherwise, their credit rating is likely to suffer. Keep in mind that the CIBIL score required for personal loans is generally 750 points and above. Higher scores lead to increased loan quantum offerings and lower interest rates.
- How can you maintain a healthy credit rating?
As you can see, keeping a high credit score is greatly beneficial for you as a borrower. To ensure the best possible CIBIL rating, focus on maintaining a positive repayment history. Avoid making common mistakes when it comes to repaying your loan. Timely payment of your loan EMIs is the best way to ensure a decent credit rating.
Other practices that can help you improve your credit score include paying credit card bills on time, opting for larger down payments, increasing the loan repayment tenor, and taking advantage of the part-prepayment system. Ensure you have a proper plan for the repayment before availing the loan.
- Steps to find your CIBIL score
Follow the steps mentioned below to easily access your credit rating at any time.
- Visit the CIBIL website.
- Create an account by providing a suitable username, password, mobile number, etc.
- Enter KYC details, such as Aadhaar number, Pan Card number, address, etc.
- Undergo identity verification through OTP.
- Accept the various terms and conditions.
Now, you should be able to view your credit information report whenever necessary.
- How can you read the CIBIL report?
You can check CIBIL score in the ‘Enquiries’ and ‘Accounts’ section of the report page. However, you can also check out the other information available here. For instance, the Personal Information section lists out your personal details including date of birth, gender, Pan card number, Aadhaar card number, and much more.
While your credit rating is one of the most important factors that can influence your personal loan experience, another aspect that you need to consider is picking the right lender. If you do maintain a healthy CIBIL score, refer to financiers who can help you avail the loan as easily as possible.
For instance, NBFCs such as Bajaj Finserv provide pre-approved offers to make availing loans simpler and faster. Besides personal loans, these offers are also available on a range of other credits, such as home loans, business loans, credit cards and more. You can check your pre-approved offers by providing your name and phone number.
Therefore, avoid missing your scheduled EMI payments today to avail better loans tomorrow. Consolidate existing debts and convert outstanding amounts on your credit card/s into EMIs to improve your credit score over time.