A CIBIL score summarises the overall credit history of a borrower. It is a three-digit number published by TransUnion CIBIL, one of the most prominent credit rating organizations operating in India. All forms of loans availed by an individual, from credit cards (through credit card app) to secured and unsecured loans affect his/her CIBIL score.
Why Is Having A High Cibil Score Important?
CIBIL score affects the chances of an individual successfully availing a loan from a premier financial institution. People having defaulted payments on loans or other forms of credit in the past is likely to carry a low credit score against their account. This reduces the credibility of a borrower.
Having a high CIBIL score, on the other hand, implies that an individual is capable of making timely repayments on all forms of credit. Thus, financial institutions readily extend loans to such individuals whether one applies through an instant loan app or by visiting the lender themselves. High-value loans can be obtained by such borrowers at attractive interest rates.
Consequently, it is essential to have a high CIBIL score to successfully avail a loan of a stipulated amount at competitive interest rates.
Applicants with no previous history of borrowing or an adverse score due to a past history of defaulting can take the following steps to increase the same-
- Maintain optimal credit utilization ratio
One of the easiest methods of improving your CIBIL score is by using a credit card. Careful use of such a revolving line of credit can help build one’s credit rating over time.
Individuals willing to improve their CIBIL score using credit card should try to spend less than 30-40% of the total limit assigned to them. Maintaining this credit utilization ratio allows them to ensure timely repayments of card dues, thereby minimizing the risk of defaults. This will leave a positive impact on the CIBIL score of an individual.
- Ensure timely repayment of existing loans
Quick loan apps such as the Bajaj Finserv App – Experia allow borrowers to keep track of all pending EMI payments and their due date. Borrowers can also select a tenor according to their repayment capability from such mobile application. Having such apps installed on their phones minimises the chances of defaulting on existing loans.
Furthermore, individuals availing new loans through personal loan apps should opt for an extended repayment tenor. A longer tenor lowers monthly EMI liabilities and makes it easier to repay the debt.
- Retain old credit cards
Old credit cards preserve the entire transaction history of an individual. If all bills generated on that card are paid in full and on time, then maintaining such credit accounts help in building a sound credit score in the long run.
- Check your CIBIL score
Tabs on respective CIBIL scores should be kept by borrowers to ensure display of accurate information as well as to understand what caused the score to decrease previously. In case wrong data is presented on such reports, requests for rectification of the same should be made instantaneously. This helps correct one’s credit rating and increase the chances of acquiring credit through an online loan app quickly.
- Mixed credit portfolio
Availing both secured and unsecured forms of credits helps in the development of a healthy CIBIL score. Nonetheless, such loans should not be availed all at once, as it might imply that a borrower is credit-dependent, leaving a detrimental effect on his or her credit score.
- Obtain a secured credit card
Credit cards are often given against a fixed deposit account. The total credit limit sanctioned in such cases is equal to the value of fixed deposit maintained. These eliminate the risk of defaulting as the financial institution can secure the utilized amount from the FD, not lowering the borrower’s credit rating. Such credit cards are easy to obtain through a credit card app as major financial institutions often facilitate pre-approved offers.
NBFC such as Bajaj Finserv brings pre-approved offers that make availing such credits quick and easy. Existing customers can avail these offers on both secured and unsecured credits, including personal loans, business loans, home loans, etc. You can take a look at your pre-approved offer by providing your name and phone number.
Credit can be easily availed from a quick loan app and repaid within the due date to improve your CIBIL score. Having a high CIBIL score has a lot of benefits in the long run, as such individuals can obtain high-value loans at nominal interest rates, and are eligible to receive certain benefits.