In finance, your credit score is your financial report card. It is vital to ascertain your credibility, and it can significantly affect your chances of getting approved for loans and credit cards. Whether you want to purchase a new two-wheeler or four-wheeler vehicle or search for a credit card, understanding credit scores is crucial. To maintain your credit score, you should perform a CIBIL score check free and keep the CIBIL score app handy by downloading it on your smartphone.
The article will dig into the intricacies of CIBIL scores and how it is the key to your financial health and loan approval procedure.
Why is a CIBIL Score Important?
A CIBIL score is a three-digit number varying from 300 to 900. It is the numerical representation of your previous financial activities and financial health. A high score depicts good financial behaviour and increases your chances of getting approved for a loan or credit card.
A good CIBIL score is important because it is among the vital factors financial establishments consider while deciding whether to approve or reject your loan or credit card application. Therefore, performing a CIBIL score check free using the CIBIL score app is necessary before applying for a credit card or loan. Here is why CIBIL scores are important!
Loan Approval
Financial establishments like banks or credit card issuers use your credit score to examine the peril of lending you money. A high score depicts low risk, making you a credible borrower over others with a low score.
Interest Rates
An appropriate CIBIL score can fetch you loans at low interest rates. Also, loan providers offer favourable terms and conditions if your CIBIL score is high, helping you save money over the loan tenure.
Factors Impacting CIBIL Scores
Your CIBIL score is calculated depending on factors reflecting your credit behaviour and financial history. Some factors impacting CIBIL scores are as follows:
Payment History
Payment history is among the vital factors. It includes whether you paid your bills on time and cleared your loans and credit card dues timely. Any case of late payment or default will negatively affect your CIBIL score.
Overdue Debt
The debt amount currently owed is considered. High debt levels corresponding to your income or credit limit can significantly reduce your CIBIL score.
Credit Utilisation Ratio
Credit utilisation is the proportion of your credit usage to the limit on your credit card. A high utilisation ratio on your credit card can substantially impact your CIBIL score. Try to keep your utilisation ratio below 30%.
Credit History Length
The time length you have had credit accounts is important. A long credit history gives loan providers and credit card issuers more insights to evaluate your credit ability. If you are new to the credit world, they need more data to assess your creditworthiness because your financial details are less.
Recent Credit Enquiries
Opening numerous credit accounts within a short tenure can be a red flag. It may depict financial stress or an abrupt rise in your borrowing, adversely impacting your credit score.
Tips to Improve Your CIBIL Score
If your CIBIL score is not up to the mark, don’t worry. You can work towards improving it. Here are a few tips to boost your CIBIL score!
- Regularly paying your bills on time is among the most efficient ways to improve your CIBIL score.
- Decrease your utilisation ratio by paying down your credit card balances.
- Avoid numerous loan applications because each application will result in a hard enquiry, reducing your CIBIL score.
- A frequent CIBIL score check free is necessary to check for errors, inaccuracies or fraudulent activities. You can contact credit bureaus and concerned authorities if you find any discrepancies. You can do so from the official CIBIL website or the CIBIL score app.
- Refrain from opening unnecessary accounts and keep your old accounts open.
- Building credit takes time. Hence, be patient and show good financial behaviour.
Steps to Check Your CIBIL Score
Now that you understand what CIBIL scores are and why they are important, let’s understand how to check your CIBIL score:
Visit the Official Portal of CIBIL
The most effortless way to perform a CIBIL score check free is by visiting the official portal of CIBIL. They give you one credit report for free every year. You can also do it using the CIBIL score app.
Fill Up the Needed Details
Next, you must enter your personal information, such as your name, contact information, date of birth, and PAN. Ensure that your entered details are accurate.
Check Your Credit Report
After entering and submitting the required details, you will get your credit report, including your CIBIL score. Review your credit report meticulously for inconsistencies and contact the credit bureau in case of discrepancies.
Conclusion
A CIBIL score is fundamental. It helps to get personal loans and credit. Good financial habits help to improve it in case of low scores and maintain it. A CIBIL score check free is necessary to keep your credit report free from errors and inconsistencies. You can check your CIBIL score for free through the official portals of credit bureaus or the CIBIL score app. It is important when approving loans or securing favorable terms and conditions. If you understand what influences your score and the steps needed to improve it, you pave the way for your financial success. Remember that maintaining a good CIBIL score is an ongoing procedure that needs prudent financial behavior.
