Here is your explainer on what CIBIL score is all about and how to stay on top of this trick:
What is CIBIL score?
CIBIL score, or credit score, is a three-digit numeric summary of your credit history. The score is derived using the credit history found in the CIR (Credit Information Report). A CIR is an individual’s credit payment history across loan types and credit institutions over a period of time. A CIR does not contain details of your savings, investments or fixed deposits.
Who determines your CIBIL score?
The tab on credit score is kept by CIBIL (Credit Information Bureau (India) Limited), also known as the Credit Bureau. Founded in August 2000, CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards.
Why is CIBIL score important?
As mentioned above, credit score is the basic criteria for lenders to approve a loan. However, there is more to it as a good CIBIL score also helps in getting better interest rates and terms for a loan. Credit score is measured within a range of 300 to 900. Conventionally, a score above 700-750 is considered to be a healthy one.
What does CIBIL score depend on?
CIBIL scores are calculated based on one’s payment history, number and type of loan accounts, length of credit history, outstanding debt and many other factors.
How to check your CIBIL score?
Checking your CIBIL score is easy as that is needed is to log on to www.cibil.com/creditscore. However this comes at a cost. After updating basic details including PAN number, a sum of money needs to be paid depending on the length of credit records one wants to access. It is also requires to update a few details related to existing/ previous loans and credit card payment.
How to improve my CIBIL score?
Of course, it’s a no-brainer that the best way to keep a high credit score is to avoid irregularities in repaying loans. However, there are more nuances involved in this regard. Here are some of the Dos and Don’ts:
- Do not use more than 30 per cent of your credit limit
- Do not keep applying if your loan is rejected
- In case of credit card payment, try to pay a sizeable amount rather than the minimum amount
- Keep the frequency of applications low i.e. do not apply for multiple loans in a short period of time
- Keep checking your credit score so that you can fix it before it plunges too much in the negative