Credit Score

The Credit Score is a number that indicates an individual’s credit worthiness. It impacts the individual’s capability to borrow and take new credit from lenders. Usually, banks or lenders use this credit score to evaluate the probability of whether an individual repay his debts or not. When you get credit and pay it back on time your credit rating improves over time and allows you the opportunity to borrow more from grantors. A person’s credit score ranges from 300 to 850 and the higher the score, the more financially trustworthy a person is considered to be. Higher your Credit Score, higher are the chances of loan approval such as personal loan, business loan, home loan, loan against property, credit cards in India.

What your Credit score\ CIBIL score says?

Here is the detailed explanation of what your credit score says.
Great – 800-900:
This is a great score. It reflects an ideal track record of repayments of all previous borrowings that means people with this score have a long history of no late payments, as well as low balances on credit cards. Consumers with excellent scores may receive lower interest rates on0 mortgages, loans, and credit lines.
Good – 600-799:
If you are planning to apply for a fresh loan or a new credit card, this score offer a good chance that your application will be granted. A score in this range shows that you have handled your previous borrowings judiciously and are a safe borrower.
Bad – 300-599:
This is considered as a bad (low) CIBIL score and your chances being approved for the new loans or credit card are very less in this case. Primary reason for getting this score can include the default on loan payments or missing credit card payments.

What affects your Credit Score?

  • Irregularity in Credit card and loan repayments.
  • Cheque bounce
  • Too many unsecured loans such as credit cards and personal loans.
  • Default as a guarantor
  • Higher the rate of application for credit cards or unsecured loans.
  • If you are defaulter for your friend’s loan for whom you are acted as guarantor.
  • Using your credit cards to the full limit.

How to improve your score?

  • Never utilize more than50-60 percent of your credit cards limit.
  • Never default your Credit card bills or loan EMI. Pay them without fail and within a specified period.
  • Don’t try to overburden yourself with the too many loans. If your credit score is good, then banks are ready to sanction more loan than what you asked for. In such cases limit yourself for needed amount.
  • Avoid having many unsecured loans and credit cards on a single name.
  • Do not forget to collect “No Due Certificate” from your banker after closing the cards accounts or loan.
  • Have 6-9 months of a gap while applying for fresh loans.
  • Never try to run away from your loans. Settle them as soon as possible in a friendly way with your banker.

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