Developing a good CIBIL score history is as important as increasing CIBIL scores. An individual with a timely repayment record and good credit practice reflects a high credit score.
As increasing the credit score is important for applying for a loan, checking the score frequently is fairly important. With the check ‘my CIBIL’ option, you can easily track your score and ensure a perfect track record. Even though building the credit score happens gradually, these guaranteed ways will take you a step further to help you increase CIBIL score effortlessly. But before we go into details, let us know the basic terms related to this topic.
What is CIBIL, and What is the difference between CIBIL and credit score?
TransUnion CIBIL Limited was previously known as Credit Information Bureau (India) Limited (CIBIL). It is a credit bureau or credit rating agency responsible for maintaining records of all credit-related activities of businesses and individuals, including credit cards and loans.
According to the CIBIL website, “The office provides information and tools to understand your credit history and financial reputation clearly and to prevent theft of personal information and possible fraud. For businesses, the office provides information solutions and support through professional services. The latest and most comprehensive data to make better and more informed decisions.”
When you realise the meaning of CIBIIL and Credit score concepts, you will automatically understand the difference between them. So now, let’s see what they mean in general.
The CIBIL is the agency that rates a consumers’ credit. The credit of a customer is calculated and is brought out as a credit score. This is reflected in the CIBIL report. The CIBIL score is basically the calculated credit score that is put together and what measures the borrower’s creditworthiness.
Credit scores are a three-digit number representing how credits such as personal loans, mortgages, and credit cards have been administered in the past. The credit score shows the lender whether it is a trusted borrower. When requesting any credit card type, the lender or NBFC examines your credit score and the credit history maintained in your credit report.
What is the Score Range, and What does it Determine?
The score is usually between 300 and 900. The closer to 900 a person’s CIBIL score is, the greater the likelihood that the person’s loan or credit card application will be approved. According to the CIBIL website, the best CIBIL score is over 750, and that can help lenders evaluate and approve your loan application. If it is below 650, it is considered poor. But it need not stay constant. You can increase CIBIL score if you follow some healthy financial maintenance tips.
What are the Simple Ways to Check Your Credit Scores?
In addition to the CIBIL website, you can also check your credit score on the bank aggregator website. The CIBIL website allows you to check your credit score with just a click on the ‘Check my CIBIL’ button for free, or you can access it by choosing a subscription plan. After the free subscription, you can view the current CIBIL report once a year. CIBIL also has paid plans that provide access to various additional features based on the plan you choose.
What are the Features of the CIBIL Report?
The CIBIL report (CIR) is the history of credit payments made by individuals to all types of loans and credit institutions over a period of time. However, CIR does not contain details of your savings, investments, or fixed deposits. The CIBIL report contains detailed information about the credit you use, such as home loans, car loans, credit cards, personal loans, and overdraft services.
The Key Parts of the CIBIL Report
Personal information: Your name, date of birth, gender and identification number such as PAN, passport number, voter ID number.
Contact Information: This section provides addresses and phone numbers, and up to four addresses are provided.
Employment Information: Monthly or annual income details reported by banks and financial institutions.
Account Information: It contains detailed information on the line of credit you use, including the creditor’s name, the type of credit line (family, auto, personal, overdraft, etc.), account number, details of ownership, account opening. Date, due date, loan amount, current balance, and monthly payment records (up to three years).
Information Query: Every time you apply for a loan or credit card, the corresponding bank or financial institution will visit your CIR. The system will record this in your credit history, also known as “query.”
What are the Best Ways to Increase CIBIL Score Quickly?
There are some simple methods to increase CIBIL score and gradually acquire the best CIBIL score. They are as follows:
- Set reminders for all your payments
- Customize your credit limit
- Opt for a longer tenor to repay
- Never go for too many debts simultaneously
- Check and Correct errors from your credit report
- Choose different forms of credit
- Build good credit history slowly
How to Set Reminders for Payments and Be Disciplined With Credit?
Paying off your outstanding debts can have a significant impact on your credit score. That is why you must maintain discipline when paying EMIs. EMI payment delays will not only force you to pay penalties but will also lower your credit score. So if you find out that this is your culprit, make sure to set up EMI payment reminders so that you can resolve these issues in time and increase CIBIL score easily.
Why Should We Customise Our Credit Limit?
Your credit utilisation ratio has a significant impact on your credit score. The more you can restrict your credit usage as per the allotted limit, the better it is for your credit score. Reaching the limit has the opposite effect as it lowers your credit score. One way of tackling this is to get in touch with your lender and customise your credit limit based on your expenses.
Why Choose a Longer Tenor When Applying for a Loan?
When you borrow money, try to choose a longer repayment period. This will ensure that your EMI is low so that you can pay on time. When you don’t default, delay, or miss your EMI payment, your credit score will improve.
Why Shouldn’t We Take Multiple Debts at One Time?
You must obtain the least amount of loans in a fixed period of time. Pay off one loan and then borrow another to prevent your credit score from collapsing. Taking out more than one loan at a time indicates that you are in a relentless cycle of insufficient funds. As a result, your credit score will drop even further. On the other hand, if you take out a loan and pay it off successfully, your credit score will improve.
How to Check Your CIBIL Report for Mistakes and Rectify Them?
Credit card companies or loan providers usually update repayment details every month or 3 months once to CIBIL, and the credit score is generated according to these credit reports. Usually, the score generated is errorless and accurate. However, there could be slight chances of mistakes that could affect your overall credit score, which can hinder the process of applying for instant loans. Therefore, visit the CIBIL website and click on check ‘MyCibil’ and get your CIBIL reports regularly. If you find any errors, quickly raise a dispute and resolve the problem. Rectification of the errors is an important step to attain the best CIBIL score.
Why Create Credit History by Choosing Different Forms of Credit?
If you haven’t borrowed money in the past, you will not have a credit history. So, your CIBIL score will be low. For this purpose, you need to be sure to borrow a healthy credit portfolio of safe and unsecured loans with long and short terms to build a good credit score. This will help you get lower interest rates and higher loan amounts when you choose to apply for personal loans in the future, and it will help you increase CIBIL score easily.
How to Build Good Credit History Gradually to Gain the Best CIBIL Score?
Good credit is about more than getting good scores when you need a loan. What you do with this loan and how you pay it back will affect your future credit score. Remember, this is not a sprint but a marathon. Maintaining a good credit score, whether you are looking for a loan or not, will help you maintain overall financial discipline. Pay your credit card bills on time, and EMI will be there on time. Even if you can afford it now and your credit score allows it, you won’t accept too many loans and credit cards, setting the stage for future debt traps. Please note that a score of 0 or -1 is not necessarily bad. This simply means that you have no credit history or credit score. When you start using a credit card or paying EMI, your credit history will be established. This will make you eligible for better choices in the future.
Constant monitoring of the credit reports on check ‘MyCibil’ will result in building an error-free score. A strong history of credit aids in attaining a high credit score, thereby providing an opportunity to apply for loans whenever required. While the CIBIL score has a range of 300 to 900, the loan lenders usually look for scores between 750 to 900. Therefore, having the best CIBIL score will attract potential credit card and loan providers.
These are the simple ways to increase CIBIL score of your’s with time gradually. These are healthy financial measures to achieve the best CIBIL scores.
FAQ
How Is Cibil Report Generated?
The Credit Information Bureau of India Limited (CIBIL) collects and maintains the records of personal and non-personal (business entities) credit-related transactions such as loans and credit cards. Banks and other lenders provide these records to the credit bureau every month. With this information, credit information reports (CIR) and credit scores can be developed.
Why is CIBIL score better than other credit scores?
The CIBIL score is a credit score generated by a credit rating agency called TransUnion. TransUnion CIBIL is the gold standard for credit ratings and the only important standard when seeking financial loans. Although many credit institutions publish credit scores, CIBIL is the most important institution in the bank.
What Are The Benefits Of Having the best CIBIL Score?
Having the best CIBIL score will not only help you get approved first, but it will also affect the quality of debt available to you. A good credit score makes a person eligible for better loans and credit card transactions. A higher credit score means that the lender will be more willing to lend you a higher amount or provide you with a better credit line.
What Is Minimum Cibil Score For Personal Loan?
You can get a personal loan from CIBIL 750 and higher. According to data from CIBIL, if the score exceeds 750, 80% of the loans will be approved. Before approving your loan application, the lender must make sure that you can repay the loan. Your credit score helps assess your risk of default. If your score is high, you are a responsible borrower and paid your credit card and EMI bill on time. A lower score increases your risk of defaulting on your loan.
How much time will it take to increase CIBIL score?
There is no definite time because the improvement depends on your situation. Whether it’s a loan or a credit card, you must pay your instalments on time. Payment history represents 35% of your CIBIL score. If you do well in this area, you can increase CIBIL score consistently. To restore your score to its ideal level, you need to start paying your loan or credit card EMI bills on time for at least 6-9 months. Since the lender will send your payment record to CIBIL about 30-45 days from the payment date, it may take 7-12 months to reach the desired score if you pay in instalments on time.
