The Meaning and Implications of Your CIBIL Score
A person may encounter people talking about CIBIL score quite often these days, especially when he or she tries to avail any type of credit from financial institutions. In such scenarios, it becomes very important to be aware of this very crucial terminology which reflects one’s credit worthiness and impacts their ability to avail future credit in a significant way. It is very pertinent to note here that all Banks and other non-banking financial institutions reports information about your credit history to CIBIL based on which financial institutions assess whether to extend the credit to a person or not.
To understand the meaning and implications of a good or bad CIBIL score completely, a person should know following crucial things about CIBIL score
- What is CIBIL score.
- How much CIBIL score is considered good or bad by financial institutions.
- How CIBIL score get affected and what are the advantages and disadvantages of having good or bad CIBIL score.
- Measures to improve CIBIL score.
- Role of personal financial management companies like Singledebt in improving your future CIBIL score and credit worthiness.
What is CIBIL score
CIBIL Score is a three-digit numeric summary of a person’s credit history and acts as a barometer of an individual’s future credit worthiness. The score is derived using the credit history found in the CIBIL Report across loan types and credit institutions over a period of time.
How much CIBIL score is considered good or bad by financial institutions
CIBIL scores typically ranges anywhere between 300 and 900, with 900 indicating the maximum creditworthiness. A CIBIL score of 750 or above in credit report is usually considered to be good and is the bare minimum for qualifying anyone to avail any type of credit from financial institutions.
How CIBIL score gets affected and what are the advantages and disadvantages of having good or bad CIBIL score
A person’s payment history is one of the key factors that affect their CIBIL score. If a person has repaid their regular Loan EMI/Credit card payments diligently in the past, their CIBIL score will increase, which may result in availing of easy credit at low/attractive rates.
On the other hand, if a person has missed/delayed Loan EMI or paying the minimum amount against credit card payments of a credit card bill. It will impact their credit history in a major way and may result in the significant lowering of CIBIL score and if a person falls in the regular defaulter category, it will certainly affect their CIBIL score adversely which may leads to financial institutions denying any type of credit or offering the credit in significantly higher rates in future.
Measures to improve CIBIL score
A person can improve their CIBIL Score by maintaining a good credit history, which is essential for loan approvals by following these 6 steps which will help improve the CIBIL score:
- Always pay the dues on time: Late payments are viewed negatively by lenders.
- Keep balances low: Always be prudent to not use too much credit, control the utilization..
- Maintain a healthy mix of credit: It is better to have a healthy mix of secured (such as home loan, auto loan) and unsecured loans (such as personal loan, credit cards). Too many unsecured loans may be viewed negatively.
- Apply for new credit in moderation: It should not be reflected that a person is continuously seeking excessive credit; apply for new credit cautiously.
- Monitor co-signed, guaranteed, and joint accounts monthly: In co-signed, guaranteed or jointly held accounts, a person can be held equally liable for missed payments. Joint holder’s (or the guaranteed individual) negligence could affect their ability to access credit when in need.
- Review credit history frequently throughout the year: Monitor CIBIL Score and Report regularly to avoid unpleasant surprises in the form of a rejected loan application.
How personal financial management companies like Singledebt can play a role in improving your future CIBIL score and credit worthiness
If you are someone who is having hard time repaying your outstanding dues on time every month which in turn is affecting your CIBIL score and future credit worthiness negatively. Singledebt, a leader in offering personal financial management solutions to individuals, can help you navigate these hard times by helping in restructuring the outstanding due amount and fixing the reasonable sum of EMI in consultation with the financial institutions and you. While also ensuring that you have sufficient funds to repay your outstanding dues/EMI on time every month, which in turn will automatically reflect in your improved CIBIL score and future credit worthiness.
Gone are the days when people who could not maintain healthy CIBIL score needs to break a sweat and lose their mind over missed payments. By availing the services of leading personal financial management companies like Singledebt. One can easily manage their other regular financial commitments without failing to repay their monthly EMI/ outstanding dues and enjoy their daily lives stress free.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. City Credit Management LLP is not liable for any decision arising out of the use of this information.