Loan Tips: Bad CIBIL will make it difficult to get a loan, follow these methods to keep your credit score better..
Credit score plays an important role in determining a person's eligibility to take a loan. It is also called the CIBIL score. In other words, banks and other financial institutions providing loans get information about the financial condition of their potential customer from the credit score.
Based on this score, it is decided whether to give a loan, credit card, or other related services to the potential customer or not. Any person needs to maintain his credit score better. This makes it easier to get loans, credit cards, etc. Let us tell you some measures to help in maintaining a better credit score.
In India, the credit score starts from 300 points and it is up to a maximum of 900 points. A credit score of 300-549 points is considered bad. Generally, the loan is not available on this score. A credit score of 550 to 649 is considered average. The loan can be obtained on this credit score but the interest rate can be high. A score of 650 to 749 is considered good. People with this credit score can get loans at normal interest rates.
A credit score of 750 to 799 is considered very good and people with this score can get loans at attractive interest rates. A credit score of 800 to 900 is considered excellent and they can get loans at rates lower than the market. However, apart from credit score, factors like age, employment status, income or salary, etc. are also important in taking a loan.
Four credit bureaus prepare the score
Four credit bureaus prepare credit scores in India. These include Equifax, TransUnion CIBIL, Experian, and CRIF Highmark. These credit bureaus decide the credit score based on repayment, credit utilization, borrowing pattern, and credit history.
Ways to maintain a good credit score
Pay your credit card bill in full and deposit the monthly installment of the loan on time. If this is not done, the credit rating agencies come to know about the financial pressure on the customers and they reduce the credit score. When you apply for any type of loan or credit card, the bank or other financial institution inquires about your creditworthiness from the credit bureau. This is also called a hard inquiry.
The credit bureau can reduce your credit score by a few points for every inquiry it receives about you. In such a situation, to keep your credit score better, do not apply for loans repeatedly.
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