What is a CIBIL score, and how can you get one?
The CIBIL score is a numerical measure of your creditworthiness. It’s a three-digit number that ranges from 300 to 900. A credit score of 900 or higher may qualify you for better credit card and loan offers. A CIBIL score of 750 or more is preferred by most lenders, including banks and non-banking finance firms (NBFCs).
The Credit Information Bureau India Limited (CIBIL), which regulates your credit score, has direct power over your future interactions with lenders and financial institutions. A strong credit score will ensure that your loan or credit card application is granted without delay, but a negative credit score will jeopardise your current and future opportunities. The major reason we can’t always keep a decent credit score is due to a lack of understanding. We find ourselves in tough situations because of our lack of awareness, especially during challenging times. That’s why we at Bajaj Finserv, compiled a list of five key characteristics that can assist you in building and maintaining a strong financial history.
Here are five things you should avoid in order to improve your credit score:
- Credit use is high:
Aside from late payments, using more than 30% of your credit limit has a negative impact on your credit score. Your score may be lowered by a few points if you neglect your income and continue to spend.
Loans and credit cards enable customers to purchase items that they otherwise would not be able to afford in whole. Making it a habit, on the other hand, can only lead to a never-ending debt repayment cycle. You may cut down on your credit card usage by utilising cash whenever possible and restricting your use of credit cards.
- Payments that are late or unpaid
The greatest adversary of a good credit score is not paying your EMI or credit card bill on time. Missing or delaying payments, as well as ignoring them, will drop your CIBIL score severely. If you can’t afford to pay the entire bill, at the very least pay the minimum to save your credit. If you’re in a financial bind and owe money on many credit cards, you can consolidate your debt by taking out a personal loan and paying simply one EMI each month. Using our smart financial health check tool, you can also check your CIBIL score for free.
- Serious Inquiries
A hard inquiry shows creditors that you asked for credit elsewhere, for any type of loan, when you apply for a loan or credit card. Hard queries leave a trail on your credit report for around 24 months. A rigorous credit inquiry lowers your credit score by between five and 10 points. So, be careful what kind of credit you apply for, how many times you apply, and how often you apply because each query is recorded on your credit report. If a hard inquiry on your credit report is incorrect, you can dispute it just like any other issue on your credit report. Multiple hard credit inquiries from the same company for different loans in a short period of time won’t have as much of an impact on your credit score. Inquiries might hurt your credit score, but it can be repaired over time.
- Guarantor or co-applicant for a loan
It is a good idea to take out a loan with your spouse or to act as a guarantor for someone who pays their EMI on time. Your credit score is improved if you have a co-applicant or guarantor with a solid repayment history. However, being in this situation is difficult because if the person defaults in both cases, you will be held responsible.
- Multiple Credit Card Applications
If one lender has turned you down for a credit card, don’t start looking for another right away. Applying for a credit card from many vendors demonstrates desperation, which will result in hard inquiries into your credit score. Lenders do hard inquiries in order to obtain your credit score. If you have a lot of hard inquiries against your name, your score will drop.
Defaulting on a credit card or loan is the biggest mistake someone can make. Defaulting on any payment might result in a lender blacklisting you for the rest of your life. We should use our missteps as an opportunity to learn and improve. Maintaining a decent credit score necessitates constant vigilance and avoiding the blunders listed.
When applying for an unsecured loan, such as a Personal Loan, with Bajaj Finserv Markets is simple, quick, and hassle-free. Plus, there’s more. The entire procedure is completed online and may be completed from the convenience of your own home. So, what are you waiting for? Take out a personal loan from us today and put an end to your financial woes.