Credit score shows how your record is in financial matters. If your CIBIL score is bad, then you may face difficulty in getting a loan. Know here how much credit score is considered good and if it has become bad then what are the ways to improve it.
Credit Score Improvement Tips 2024
If you apply to a bank for a loan, then first of all your CIBIL score is checked. CIBIL score is also called credit score. Credit score shows how your record is in financial matters. If your score is good then you can get a loan easily and with a better interest rate. But if the CIBIL score itself is bad, then there can be difficulty in getting a loan. Know here how much credit score is considered good and if it has become bad then what are the ways to improve it.
How much CIBIL score is considered good
The credit score is determined between 300 to 900. If your credit score is 750 or more, it is considered good. A score between 550 to 750 is considered fair and a score between 300 to 550 is considered bad. Your credit score depends on many things. 30% of the CIBIL score depends on whether you are repaying the loan on time or not, 25% on secured or unsecured loan, 25% on credit exposure and 20% on loan utilization.
Improve your credit score in this way :Pay the loan installment on time
If you have taken a loan from the bank, then pay the bill on time. And if you use a credit card, then pay the expenses made through the credit card on time. This will automatically start improving your credit score.
Do not increase your credit card limit frequently
Having a high credit card limit is not an achievement, rather it only increases your expenses. Therefore, do not try to increase your credit card limit again and again. Increasing the card limit is a proof that your expenses are excessive. In such a situation, whatever you spend from the credit card, you will have to pay that bill. Sometimes if the bill is high and you are not able to pay it on time, then your credit score can be affected.
Do not take multiple loans at the same time
If you want to maintain a good credit score, you should avoid taking multiple loans at the same time because in such a situation the burden of EMI increases a lot. Sometimes you may miss the EMI. This can spoil your credit score.
Think carefully before becoming a loan guarantor
Think well before becoming someone’s loan guarantor because if the borrower does not repay the loan on time or does not pay the installments on time, then you will also have to bear the brunt of it and this can spoil your credit score. Therefore, even if you become someone’s guarantor, keep an eye on whether the borrower is paying the installments on time or not.
Use up to 30% of your credit card limit
Use only 30% of the credit card limit. Avoid making large purchases using a credit card. This can damage your credit score. If in any case you have to make a large purchase using a credit card, you should pay it off before the billing cycle ends.
Nowadays most of the people have taken loans for buying or building a house or buying a car and other things. Taking a loan has become a common thing, be it a home loan or a personal loan. However, CIBIL score is important for getting a loan. If the CIBIL score is weak, it is very difficult to get a loan. Interest rate in many banks is also determined by CIBIL score. Therefore, it is important to maintain and improve the CIBIL score. Besides, banks also check your CIBIL score while issuing credit cards.
What is the benefit of having a good CIBIL score?
CIBIL Score provides information on loans taken in the past. Therefore, a good CIBIL score is essential for taking loans and credit cards from banks. Regular loan repayments keep a good credit score. CIBIL score ranges between 300 to 900 points. Getting a loan becomes easier if the score is 750 points or more. The higher the CIBIL score, the easier it is to get a better loan. CIBIL score is calculated based on 24 months of credit history.
How to Check Sibil Score?
Nowadays there are many websites which provide information about CIBIL score. However it is necessary to check by going to Sibil website. For this you have to go to the website www.cibil.com and fill the online form there. You can also download the form from here. For this you have to pay 550 rupees. It will have one time authentication process and after that process you can download Sibil score and report.
How to fix a bad CIBIL score?
To improve your CIBIL score you need to continue paying your bills on time. CIBIL report can be improved if you pay the loan on time for 6 consecutive months. You should keep your credit card credit limits and balances low, and you should not borrow more than your credit card or apply for multiple loans. Secured loans like home loans, auto loans should be given more importance and unsecured loans should be avoided. Also, you should avoid closing your credit card account. If you have a joint account, check its CIBIL score regularly.
What to do if a wrong CIBIL score is shown?
The bank sends information related to the loan and account to CIBIL. Even from the side of the bank, sometimes there may be a mistake. If there is any mistake on the part of the bank, you can complain in writing to the nodal officer of the bank. You can present your case by filling the dispute request form on the CIBIL website. The Dispute Resolution Cell will look into your complaint. If hearing is not held then you can complain to Bank Ombudsman at www.bankingombudsman.rbi.org.in.
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