How to get a better CIBIL score: If you have ever taken a loan from a bank or used a credit card, then you must have heard the name of “CIBIL score”. In today’s time, it is not just a number but a mirror of your entire credit history. Banks and financial institutions decide on the basis of this score whether to give you a loan or not. It can be understood in this way that the better the CIBIL score, the easier it will be for you to get a loan or credit card.
What is considered a good score?
CIBIL score ranges from 300 to 900. If your score is 750 or more, then it is considered excellent. This is the level where banks trust you that you will be able to repay the loan on time. On the contrary, if the score is low, then banks can charge you a higher interest rate or sometimes even refuse to give a loan.
Timely payment is the biggest key
Many people believe that only taking a loan affects the CIBIL score, but the truth is that the biggest impact is from your repayment pattern. If you have taken a loan or are using a credit card, then paying EMIs and card bills on time is the most important. Even a day’s delay can leave a stain on your credit report.
Another important thing in the case of a credit card is not to use the entire limit. If you have a limit of one lakh rupees, then try not to spend more than thirty thousand rupees in a month. This is called the credit utilization ratio, and it directly affects your score.
Avoid becoming a defaulter
Many people in India take joint loans with family or friends. Initially, it seems easy, but if one person defaults in paying the installment, it affects everyone. If your name is linked to the loan and the other person becomes a defaulter, then your score will also go down. Therefore, a complete assessment of responsibility and trust is necessary before taking such steps.
Balance between secured and unsecured loans
Another aspect that people pay less attention to is the type of loan. Home loans or car loans are called secured loans because they have mortgaged property behind them. On the other hand, personal loans and credit cards are considered unsecured loans. Banks assess the type of loans you have taken by looking at your portfolio. If you have a balance of both, it improves your score. Taking only unsecured loans makes the bank feel that you are more likely to default.
Identity of trust in the world of loans and credit
In simple words, a CIBIL score is the identity card of your financial credibility. It tells not only the bank but also you how honestly you have used your money so far. A better score means that you can easily take a loan in any difficult time and can also negotiate on the interest rate.
How can the situation change
A good credit score is not made overnight. This is a process that is based on your regular behaviour. If you start making payments on time, maintain a balance in expenses, and stay away from unnecessary loans, you will start seeing a difference in a few months. Anyone can achieve a score of 750 or above by adopting financial discipline.