As part of the government’s financial inclusion efforts, more and more people are now joining the formal banking system. When a person opens a bank account, they may receive credit card or loan offers, but the loan or credit card is sanctioned after reviewing the customer’s credit rating. The CIBIL score is one of the credit ratings assigned to a borrower by the credit information company TransUnion CIBIL. Here’s what the CIBIL score is, why it’s important, and how you can maintain a good score.
What is the CIBIL score?
Ranging from 300 to 900, the CIBIL score is a three-digit number. The higher your score, the better. Generally, a score above 750 is considered good where the chances of loan approval become higher. It is a digital summary of your credit history and a reflection of your credit profile, showing your credit behavior as a borrower. It also reveals if you have defaulted on a refund in the past. This score gives an overall indication of your creditworthiness and history.
The report containing the CIBIL score is called the CIBIL report. The report contains tabs – personal information, contact information, employment information, account information and application information.
CIBIL score: its importance
When you approach a bank for a loan, the bank checks your creditworthiness and repayment history. The bank approves the loan only if your CIBIL score is good. Thus, maintaining a good score is very important. The score also saves individuals from worrying about paper to prove previous credit records.
The CIBIL report allows the bank to review your credit history, including whether you have been punctual in paying off your previous debt. It also shows the number of loans you have taken out so far, including the amount and duration of previous loans. It includes records related to both credit cards and loans. It helps banks mitigate the risk of failure and thus reduces losses.
CIBIL score: how to maintain a good score?
Do not delay the reimbursement of dues: If you want to maintain a good CIBIL score, the first thing to do is be strict with refunds – pay on time and never delay. The repayment of loans or credit card dues has a very significant impact on your CIBIL score.
Don’t let your credit card limit always run out: It is advisable to get a credit card with a higher upper limit, if you find it difficult to stay within the card’s existing limit. The credit utilization rate must be limited to 30% to have a good CIBIL score.
Diversified loan products: It is best to diversify the loan portfolio with a good mix of secured and unsecured debt in order to achieve a high CIBIL score. A credit card is unsecured debt, while a home or car loan is secured debt.
How to Check CIBIL Score
CIBIL provides one report per year free of charge and can be viewed online. Here are the steps by which you can check the CIBIL score:
1) Go to the official CIBIL website https://www.cibil.com/
2) Select “Get your CIBIL score”
3) Click on ‘Click here’ to get your free annual CIBIL score
4) Type your name, email address and password. Attach ID (passport number, PAN card, Aadhaar or voter card). Then enter your PIN code, your date of birth, as well as your telephone number
5) Click on ‘accept and continue’
6) You will get a one-time password (OTP) on your registered mobile number. Type the OTP and select “Continue”
7) Select “Go to Dashboard” and check your credit score
8) You will be redirected to myscore.cibil.com
9) Click on “member login” and once logged in, you will be able to see your CIBIL score.
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