CIBIL Score Boosting Mantras
Banks use credit scores to help them make decisions about whether or not to provide you with credit. It assesses your creditworthiness, and CIBIL is the most widely usedcredit score in India. They maintain track of transactions and payment records between individuals and lenders and construct a Credit Information Report (CIR) and credit card score based on this information. Lenders and credit institutions use the CIBIL score to gauge an individual's credibility and, as a result, analyze and approve loans.
It's just as vital to maintain a healthy credit score as it is to understand the factors that influence it. Apart from the numerous aspects that influence your credit score, your payment history is critical because it functions as a deciding factor and accounts for roughly 1/3 of your credit score. The following are the criteria that influence your CIBIL score:
Keep reading: How to Improve Your Cibil Score After You've Settled Loan??
1. A history of credit payback
The most crucial factor in determining your CIBIL score. Your CIBIL score will improve if you have a history of timely payments and no defaults on loans and credit cards. It depicts your timely payment practices, and banks are reliant on you. Any missed payment or EMI will show up on your payment history, which will lower your CIBIL score
2.Utilization of Credit
If you max out your credit cards, it will reflect negatively on your CIBIL score and convey a negative message to the bureau. Higher credit use represents your increasing debt burden, whereas planned use of available credit and smaller drop in credit utilization will help you improve your credit score. If you're wondering how to boost your credit score, you should aim for a credit use rate of 40 percent to 50 percent of your credit limit.
3. Credit Combination
A good variety of loans and credit accounts for a large component of your CIBIL score and demonstrates credit handling versatility. A good balance of secured and unsecured loans can help you raise your CIBIL score, but lenders are afraid of unsecured loans because they have higher interest rates and are more likely to default.
4. Credit Record
Credit history is extremely useful to banks and lenders in determining payment behavior and acquiring important information. The duration of one's credit history is also essential. Because a new credit card holder has no credit history, banks cannot use the score as a criterion, so they look for other reasons. Apart from that, having a long credit history boosts your chances of getting a loan, and keeping your older credit cards rather than tossing them is a good option.
5. The Burden of the Loan
Even if you can afford it, taking too many loans in a single year may give the CIBIL and other credit bureaus a bad impression of you. This indicates your greater debt burden as well as your sensitivity to a negative credit history. Personal loans, which are unsecured loans, may damage your CIBIL score if taken out in your name. To maintain your CIBIL score strong, you should pay down your unsecured loans.
The CIBIL score has become the most important criterion in determining a person's financial standing, and it can make a significant impact in the loan approval process. If you're looking for information on how to enhance your Cibil score these easy points may be useful.
