If you have an email address, then you are bound to get spam emails about your CIBIL score. While they shouldn’t worry you because most of them are fake anyway. Here’s what you should do though: Be proactive about knowing your CIBIL score and improving it.
What is a CIBIL Score?
The CIBIL score is a 3-digit number that ranges from 300-900. The closer your score is to 900, the better off you will be. So, it’s another term for your credit score and your credit history. The Credit Information Report (CIR) summarises all your payment history of loans as well as credit cards, that is to say, every single sum of money you have borrowed to generate your CIBIL score. If you are looking to apply for loans or applying for a credit card, this will be the first hurdle that you need to cross. A healthy CIBIL score can help you get access to a lot of financial services.
Think of your CIBIL score as the score you would use to get into universities. For example, if there are two individuals with a credit score of 800 and that of 600 respectively, who do you think will have a better chance of securing a loan? Definitely the person with the score of 800.
In order to understand how the CIBIL score is calculated, you have to understand that it mostly revolves around your credit history. But, to be more precise, it revolves around different factors that deal with credit. First, it is your credit history which is given the highest weight when calculating your score. Then, it also depends on the nature of loans you have taken in the past and the duration it took you to repay back your loan. It also includes the amount of credit that you have outstanding while you are applying for a new loan.
Your CIBIL score does take up a lot of things into consideration. But, as long as you are taking loans and paying them on time, you are good to go.
What Factors Can Negatively Affect Your CIBIL Score?
As you might have very well understood, your CIBIL score emails are not important. But, the score itself can help determine a lot of things for you financially. You need to treat it seriously if you ever wish to loan money at any point in time in the future.
If you have a habit of delayed or late payments, try to curb that as much as possible. It will hinder any chances of getting loans in the future. It will put you in a bad position because this hurts your CIBIL score.
Pay attention to your utilization percentage. This is the ratio of your total outstanding loan to your credit limit. If you repay your loans on time then your outstanding loan and credit balance goes down. This also allows your utilization ratio to go down considerably. So, your aim is to keep this ratio as low as possible. This is something that the credit bureaus take very seriously. If your current balance is increasing over time, then you need to understand that your own debt burden is increasing. This will affect your CIBIL score in a negative way.
Opt for secured loans because it often allows you to exhibit a better creditworthiness. That does not mean you should only opt for secured loans. Have a healthy mix of secured and unsecured loans in your portfolio to boost your chances of getting better loans and a good CIBIL score.
Ensure that you do not have high numbers of credit applications to your name. The more you have, the fewer chances you will have a good impression. You will come off as a credit hungry applicant to the credit bureau.
How Does The CIBIL Score Affect You
A CIBIL score is your report card that lenders view in order to deem you worthy of a loan. A good report card will get you through and a bad one might make you regret past decisions. Every single aspect of your credit history is analyzed to give you the credit score that you deserve. But you have to understand that a low credit score means you have less creditworthiness. It does not mean that you will be disallowed from getting a loan. It means you will have to work a bit in order to get your scores up again.
Different financial institutions have different requirements. So, while you might not get a loan approved from Bank A, you might get the same loan approved by Bank B. So, do not lose hope.
Getting Your CIBIL Score In Order
For people who are yet to have a CIBIL score or their score comes up as NA or NH because they do not have a credit history, do not fret. You might also have a credit history but not availed any loans or credit cards till date. Or you do not have any direct exposure to credit because you use an add-on credit card. While all of that is not an issue, you should remember that you have the chance to create a good credit score. You can have a good CIBIL score if you have a disciplined outlook towards your finances.
However, nowadays it has become easier for people even with low CIBIL scores to secure loans and credit cards. Fintech companies are much more relaxed when it comes to your credit scores. So, if you need a loan but your credit scores are not up to the mark, then you can opt for these online Fintech firms to help you out. If you can repay your debt on time, you will be able to boost your credit score as well. In fact, many Fintech companies offer loans at lower interest rates. So, it’s a win-win for you.