“What do I need to get a Loan? What’s a CIBIL score? How can I check it? How much does it matter?”
Accessing funds when you need it the most can be challenging and frustrating. It doesn’t help that you need to keep running to the bank, submit lots of paperwork, only for your application to be rejected!
We’re here to explain the first fundamental basic - CIBIL score - that could help you easily avail a loan and make the process easier.
Your CIBIL score is a three-digit numeric summary of your credit history and is an important factor that lenders take into consideration while evaluating your loan application and deciding whether you’re a good candidate to give a loan to.
Your CIBIL Score is important because:
It is representative of your creditworthiness to a lender. A lender will check your CIBIL score and depending on how good it is, will give you options. Sometimes there is a proportional relationship between your credit score and the interest rate charged.
Your CIBIL score can range between 300 - 900, the higher the CIBIL score the better for you!
A higher score means you can get a loan from banks
Your application processing time might be reduced
You can avail a greater loan amount
Your CIBIL score can give you an idea of your personal financial situation, and help you strategize accordingly.
What does your CIBIL score mean?
800 - 850: Excellent
740 - 799: Very good
670 - 739: Good
580 - 669: Fair
Below 579: Poor
Some factors that influence your CIBIL score are,
Payment history: Late or default payments on your EMIs have a negative impact.
Credit inquiries: If you apply for too many loans and they make inquiries about your CIBIL score it can have a negative impact.
Your CUR - Credit Utilisation Ratio is how much credit you have availed divided by the amount of credit you can avail. For example - you can avail 10,000 rupees using your credit card, and you use it for 5000 rupees. Your CUR will be 50%. A good CUR is between 30-35%. Too low marks you as someone who has no experience with credit and too high means you are risky!
Cash withdrawal from a credit card: If you withdraw money using your credit card, you may end up with a poor CIBIL score.
Here are some ways to improve your CIBIL score:
Pay your credit card dues on time
Avoid defaulting on EMIs
Don’t constantly check your credit report for inconsistencies and errors
If you don’t have a credit history, apply for a credit card and make sure you use it wisely!
Don’t over-utilise credit limits beyond a certain limit
Don’t delay filing a dispute with the credit bureau ignoring errors in your credit report
In India only 63% of Indians have a credit score! For women availing a loan is even harder. But don’t worry, a CIBIL score does not need to hold you back from getting a much needed loan! Services like Florence Capital help women of India get instant loans from the comfort of their homes!