When prospective borrowers apply for loans, one of the crucial elements we consider is their CIBIL score, which is known as their credit score. A good credit score shows an individual’s economic stability, which facilitates financial transactions.
What exactly is a CIBIL score? What is good CIBIL score?
A CIBIL score is a three-digit numerical expression that varies from 300 to 900 based on thorough analysis and a complete evaluation of a person’s credit files and history, indicating an individual’s creditworthiness.
What does a good CIBIL score mean?
A decent CIBIL score ranges from 720 to 900 and is established completely by your credit behaviour and history. You can check CIBIL score on our website. It provides the borrower with numerous advantages, including faster approvals, reduced interest rates, and a larger loan amount.
A CIBIL score of 750 or more is considered an excellent CIBIL score for an unsecured loan. Borrowers with a high CIBIL score have a better chance of securing the best interest rate on a loan, as well as a faster approval procedure. It saves you money and time in the long run.
As a result, it is obvious that a credit score of 700-900 will be considered good.
The advantages of a high CIBIL score-
What is good CIBIL score and credit score? A good credit score has numerous advantages. You can check CIBIL score with Bajaj Finserv. As a result, an ambitious loan applicant must be informed of the benefits before applying for a loan to select the loan that best meets his needs and expectations.
- Increased chances of approval
When you apply for a loan or credit card, every lender retrieves your credit report and examines your credit score. This is referred to as a hard inquiry, and any such enquiry lowers your credit score. If your application is refused, the consequences can be irreversible. However, if you have an excellent credit score, the likelihood of your loan being approved is exceptionally high due to your solid credit history and previous instances of regular and prompt repayment of the loan amount.
A good credit score also indicates that you have not accepted many loans from multiple lenders; that you have not accumulated debt that makes repayment difficult. As a result, the lender is confident that the loan will be repaid in full and on time, and so the approval prospects are quite high and nearly guaranteed. If your CIBIL score is between 700 and 900, you can expect to borrow up to 80% of the total cost of the house. However, similar requirements cannot be expected in the case of a personal loan because it is an unsecured loan, and thus the loan amount will be determined by the reason mentioned as well as your CIBIL score.
There is no specific CIBIL score that qualifies you for a car loan; nonetheless, it is recommended to have a score above 700 to remain assertive when asking for a car loan.
- Interest rates at a low
Low borrowing rates are the key advantage of maintaining a strong CIBIL score. Interest is calculated based on the likelihood of default. A strong credit score determines trustworthiness as well as regular and timely repayment of previous loans. Because the risk of default is low, the incentive is reflected in comparably low interest rates.
- Greater limits
A high credit score demonstrates that you are a trustworthy and reliable borrower. As a result, the lender may be less hesitant to provide you a greater credit limit on your card or a loan with a comparable higher loan amount.
CIBIL score influencing factors
There is a pervasive ignorance regarding the activities and behaviours that influence your CIBIL score for a personal loan. However, once you comprehend the significance of your credit score, you must also understand the factors that influence it.
When the payment has been delayed:
A single late payment might have a negative impact on your credit score. Late payments reflect a lack of financial planning and management. It’s likely that you just forgot about an EMI among the stress and confusion of many EMIs with varying renewal and repayment deadlines. However, such an accidental delay may affect your CIBIL score. As a result, it is advisable to choose a debt consolidation loan or a line of credit to prevent the burden of keeping track of many loans with multiple due deadlines. As a result, the danger of your credit score dropping because of an EMI prohibition or reduction is removed or decreased.
- High credit limit utilization
The maximum amount a borrower can spend on a credit card or revolving line of credit is referred to as the credit limit. Typically, lenders set a credit limit depending on the borrower’s ability to repay. The credit limit represents the maximum amount of money he can spend on repayment after meeting all other financial commitments. If you routinely spend more than 50% of your credit limit, your credit score may suffer. It demonstrates that you are inept at handling and managing your finances. It is critical to keep your expenses under 50% of your credit limit to retain a high credit score.
How can I check my credit score?
Here’s how to check your CIBIL score:
- Step 1: Go to TransUnion CIBIL’s official website.
- Step 2: On the home page, under the ‘Personal’ tab, click the ‘Get Yours Now’ button for a free CIBIL score. After paying the necessary fees, click on ‘Get Your CIBIL Score’ to obtain a complete report.
- Step 3: Assume you have chosen a free CIBIL score. In the first step, you will be taken to a page where you will be asked to input your personal information. The second step in the registration process is to authenticate your identification using a government-issued identity proof document.
- Step 4: Sign in to your existing account if you already have one.
- Step 5: Your credit score will be emailed to you at the email address you supplied when you signed up.