CIBIL or CREDIT INFORMATION BUREAU (INDIA) LIMITED – India’s first credit information company (founded in August 2000) collects and maintains records of individual’s loans and credit cards. These records are put forward on a monthly basis to CIBIL by its associate banks and credit institutions. The information collected by these associates are exercised to generate the credit information reports and gain the credit scores, thus helping the credit institutions to assess the approved loan applications.
CIBIL was organized and created to play a critical role in India’s financial system. The association helps loan providers establish their businesses, and at the same time help consumers secure their credit more rapidly.
Credit or CIBIL Score:
A credit score or CIBIL Score is a three digits numeric summarized from your entire credit history based on the data provided in the credit information report. The credit score normally ranges between 300 to 900.
CIBIL Score – Why It’s Important?
CIBIL performs a key function in a loan application and its approval processes. The process starts with the loan application submitted to a bank, on the basis of which it would verify your credit score and the credit reports. If it comes out to be a bad credit history and a low credit score, the bank may completely reject the loan application, and if the credit score comes to be good, the bank will surely consider the loan application and pass it through for approval.
For banks considering the loan application, CIBIL score is a priority factor. The higher the score, the higher will be the chance of a loan application getting approved. However, this comes with a limitation. CIBIL as an institution does not play any role in the approval of the loans application. This decision completely rests upon the bank.
How To Find Your CIBIL Score?
CIBIL score can be checked online from CIBIL’s official website using an online request form. The process is easy, and lasts for minutes.
The process is initiated by filling the online application form with your personal details and valid proofs mentioning the date of birth, address, phone number, income, identity proof and address proof. After the required information is submitted, the page will direct you to the payment mode asking for a nominal charge, which can be made through credit or debit cards and Net banking.
Once transacted, few authentication details will be needed to move further. Once the verification is done, the CIBIL score will be e-mailed within 24 hours. Confirm the credit rating from time to time, and if it’s low, following steps should be taken to improve it.
How to Improve Your CIBIL Score:
Building of reputation takes time and so does the credit reputation. No quick fix solutions are there, and it requires a lot of effort. Some ways to get your Credit/ CIBIL score up are.
Better manage your debt portfolio
Set free your unsecured debt as early as possible. The reason is – secured debts or loans impact your score more positively. A high amount of unsecured debts suggests the growing need of funds for your personal purposes, thereby shedding doubt on your skill to generate sufficient income for yourselves or to create the non-refundable income.
Multiple debts can’t be managed easily. So, it is better to pay off multiple debts through one loan as it will make tracking easier. Often, a consolidation loan can be availed at a lower rate of interest than the interest you pay on your existing loans.
Do not go for fresh credit
Upon discovering that you have a poor credit score, stop yourself from applying at another bank for your next loan. The more inquests a lender will put into CIBIL to analyze about your credit/ CIBIL scores, the lower it will go. The only way out is to seize yourselves for a while and get the credit score yourself. This would mean a soft inquiry, and can be used further for new loans applications, avoiding all the negativity.
Pay your existing debt
Formulating timely payments on your current arrears will restore and rebuild your credit history. Make sure to pay all your outstanding dues, as this would positively mirror on your Credit information report (CIR).
Use limits wisely
Never use the entire credit limit available to you. Use only seventy-five percent of your approved credit limit as this show a calculated spending.
Check for discrepancies in credit report
It is always advisable to check for discrepancies as your credit/CIBIL score is a mirror of what has been recorded in your report. In case, the associate bank or institution sends any incorrect information across to CIBIL, then you can check by approaching the bank and make them correct the info. Ensure all your timely payments are recorded and submitted to CIBIL by your lender.
Check your score regularly
Always keep an eye on your score by obtaining your credit report 2 or 3 times a year. It’s good to correct the differences at the earliest.
Improving the CIBIL score isn’t impossible, but one needs to be patient. It may take few years to get your CIBIL score up to 750 at least, and this can be done easily with concentrated efforts and adequate financial discipline.