CIBIL Score Calculation

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CIBIL Score Calculation

Praveen Sharma
Saturday, January 19, 2019

Do heavy financial terms baffle you? Worry not! We have come to your rescue. We will begin by telling you about cibil score free, how to calculate CIBIL score and how to increase CIBIL score. Read on to find out!

Understanding your Credit Score

Before getting into details, we must first understand what exactly is a Credit Score or a CIBIL score?

Continue Reading: How to calculate bank loan interest

CIBIL stands for Credit Information Bureau (India) Limited.

A Credit Score or the CIBIL Score is a three-digit numeric summary of an individual’s credit history. This score is derived using the credit history found in the CIR. So, what is CIR?

CIR is a person’s credit payment history across loan types and credit institutions over a defined time period. Let us try to put it in simpler terms. A CIR does not consist of details of your savings, investments or fixed deposits. It actually contains detailed information on the credit you have availed, such as home loan, automobile loan, credit card, personal loan, overdraft facilities. Simple enough, right!

The credit score normally falls in the range of 300 to 900. A score above 700 is considered good. 

How to find out your CIBIL score?

You can compute your CIBIL score online. Merely a few minutes of your time and a nominal amount of fee is what it’ll take!

You should acquire your credit report and score personally than through a bank/financial institution. This is because inquiries from banks and other lenders might affect your score negatively.

Why is your CIBIL score important?

You might be wondering, why bother spending time and money on finding out this score? Why is it necessary?

Let us understand why it is important to know your CIBIL score.

CIBIL is of major importance in a loan application and approval processes. Without a good CIBIL score, you may not be eligible for loans. And that is not a position we want you to be in!

Whenever you apply for a loan, the bank will look at your CIBIL score and credit report. If you have a low score and a poor credit history, the chances of approval of your application are low.

Therefore, a high CIBIL score is a must for higher chances of approval. So, pay attention to your CIBIL score!

How to Improve your CIBIL score?

1) Current position

Know where you stand and set a target on how much you want to improve your CIBIL score. It is suggested that you take your score above 700, because that’s going to help your loan application get accepted. And the closer you get to 900, the better it is for you.

2) Pay your outstanding loans

This is a no brainer, right? Timely payment of outstanding loans reflects well on your image as a responsible applicant. Your creditworthiness is boosted and so is your CIBIL score. Make timely payments and improve your score! Also, make full payments. Part payments are considered overdue and will not be much appreciated by your bank. Full payments will earn you brownie points!

3) Use your credit card wisely

Do a thorough cleaning of your credit card. This means using the credit card in such a manner that you clear off the credit before the due date arrives. Clear any outstanding dues that you have because it does not reflect positively on your score. And keep only one, or a maximum of two credit cards in possession. It will reflect positively on your CIBIL score.

4) Get inaccurate entries in your CIBIL score rectified

If you happen to find any inaccurate entries in your credit report, you must appeal against them on the CIBIL website and get them corrected. These entries can affect your score badly, so it is very important to get them corrected in time.

5) Pay your EMI’s regularly

Prompt payment of equated monthly installments of your past bigger loans on time will help in improving your track record to pay bigger amounts and thereby getting a higher CIBIL score/rating. If it comes to the notice of your banker that you are not very regular in your EMI payments, your loan application stands a good chance of getting rejected. So pay your EMI’s regularly!

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