Imagine you are in need of a loan from the bank. It could be any loan such as car loans, house loans, etcetera. Before granting you any loan the financial institution will take a look at your CIBIL report and only then will lend you the loan you need and you are asking for.
The only time you will be allowed to take a credit from the banks or financial institutions is when your credit score is good. If your score is mostly above 650 that means your credit score is good but if you score lower than that then it means your creditworthiness is low.
CIBIL score tells about your past records of financial discipline that you have maintained all these years. If you were absolutely punctual when it came to giving back payments to the banks from where you’ve taken a loan and if you have paid your credit card bills on time, your CIBIL report will show a good score. But if you are someone who has taken loans from multiple banks and is not paying the payments properly and you’ve not paid your credit card bills, you will get a bad score.
Having a good CIBIL score will help you get any type of loan whether it’s a personal loan. Home loan, car loan or any other loans.
What is a Good CIBIL Score?
CIBIL is an agency approved by the RBI (Reserve Bank of India) and it keeps an eye on the way we maintain a financial discipline. It forms the score on the basis of the reports coming from the banks and other financial institutions. A good CIBIL score is something in between 700 to 900. An average CIBIL score is 450 and a poor CIBIL score is 300 and below. If you have scored anything between 700 to 900, the banks are more likely to grant you loans that you are seeking.
Why Does your Score Matter?
If you are seeking loans from too many financial institutions at one time and your CIBIL score is not upto the mark then the institutions will assume you cannot pay the money back and are desperate for a loan. To have a good score on CIBIL report you need to have a good payment history. Your interests and loans should be paid back on time. Your credit card payments should be on time. These are the factors that determine how good your scores are on the CIBIL report.
When it comes to spending from your credit card, make sure you don’t spend more than 30% of the cash limit you have. Spending more than that will create a bad impression. For example, you may have a credit limit of Rs. 1 Lakh and your expenses are Rs. 30,000, then you’re under 50%. More than 50% will hurt your credit score and will create a bad impression.
In a nutshell, in order to have a good financial score on your CIBIL reports you need to make sure you have a good financial discipline. You have to make sure all your payments are on time and there are no bad credit scores on your name. This will help you get loans from multiple banks and institutions and help you get all kinds of loans. To check out your CIBIL scores for free check out Finserv MARKETS.