Unless it’s an emergency, you should always be aware of your credit score. Checking before applying can help you avoid submitting an application with a high probability of rejection. Additionally, checking your CIBIL score often helps you stay on top of any discrepancies or errors in your profile. Often these can be a sign of cheating and only through frequent monitoring can you stay ahead of the game and challenge issues before they escalate. All of these practices are essential to maintaining a good CIBIL score, but what does your score indicate? For answers to this question and how to check CIBIL score, build and maintain a good score, read on.
How to check the CIBIL score?
With several platforms offering free CIBIL Score verification solutions, it is possible to complete the process online in minutes. You can either log in to the CIBIL website to check your credit score or use other service providers and financial institution tools for a free CIBIL Score check. You will need to fill out a simple form with your details. This will include your name, date of birth, ID, contact number, address, income, and other additional information. Once you have access to your CIBIL score and credit report, read carefully to notice errors and understand the factors that influence your score.
What is a good CIBIL score?
TransUnion CIBIL is one of the best credit rating companies that calculates your credit score. It takes into account information sent by various financial institutions to generate your credit score. CIBIL considers four important factors, including your repayment history, credit usage, credit applications, and the types of credit you have. Each of these factors represents a certain percentage of your CIBIL score. Generally, a CIBIL score of 850 and above is excellent and implies high creditworthiness.
Subsequently, a CIBIL score between 750 and 849 is excellent for your creditworthiness and a score between 700 and 749 is considered good. During a credit score check, if your score is below 650, you should analyze and take the necessary steps to improve your score.
A way to increase and maintain the CIBIL score
- Make timely repayment to create a good balance sheet
Your past credit behavior plays a crucial role in determining your CIBIL score. By paying your EMIs regularly and on time, you can improve your credit score. Not only that, timely reimbursement helps you avoid late fee payments. If you have multiple IMEs and are having trouble keeping track of your payment, you can set automatic payment or reminders.
- Do not close old accounts and present a long history
Having a long credit history helps you display consistent behavior, which can improve your credit score. But it’s important to make sure your oldest account has a positive impact rather than a negative one. This means that if you have old credit and haven’t paid the dues, it’s wise to pay the amount and close your account. On the other hand, if a credit account shows good repayment behavior, you should not close it. Additionally, keeping your oldest account active also helps you maintain a good relationship with the financial institution. This can come in handy when you want to apply for a new line of credit or a loan.
- Maintain a good credit utilization rate
The credit utilization ratio refers to the amount of credit you are using compared to the available limit. A high utilization rate can have a negative impact on your CIBIL score. As a general rule, you should maintain your ratio at 30%. If you have a credit limit of Rs. 1 lakh, do not exceed the Rs. 30,000 mark. Using a higher percentage of your assigned credit will cause your score to drop.
- Avoid displaying credit-greedy behavior by making multiple new applications
Applying for new credit in a short time has several disadvantages. First of all, each new application momentarily reduces your CIBIL Score. So multiple applications will cause a noticeable drop. Second, these inquiries in your CIBIL profile are logged and lenders can view this history. Applicants with multiple inquiries in a short period of time are considered credit-hungry people. This is a red flag for most lenders, and many are less likely to approve your application.
- Monitor your credit report
It is essential that you check and review your credit report regularly. Indeed, it allows you to make the right decisions and the right actions at the right time. Also, as mentioned above, it can help you spot any misinformation or discrepancies in your report. These can lower your CIBIL score, especially if it is a reporting error made by your lender. During a CIBIL score check, free downloadable report options are available. Use them to get a detailed overview of your account. Remember that you can only get one free CIBIL Score check per year.
With the right metrics, you can easily improve your CIBIL score and get the most out of it. With discipline and the right credit management habits, you can increase and maintain a good CIBIL score in no time. Additionally, knowing how to increase CIBIL score is helpful because it teaches common mistakes to avoid. Remember that an excellent CIBIL score is a huge advantage for any borrower, as it not only gives access to the best offers from the best lenders, but also guarantees easy access to funds through pre-approved offers.
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