The closer your credit score gets to 900, the better it is for the approval of loans and other credit instruments.
A credit score of 700 and above is considered good. The score builds up gradually, and it takes roughly 18 to 36 months of credit usage to gain a satisfactory credit score.
Your credit score plays a crucial role in getting a loan from a bank. When you approach a lender or a financial institution, they check your credit score or report before approving a loan.
A credit report contains the record of your credit history from banks, credit companies, and non-banking financial companies (NBFC).
A low credit score indicates that you may have failed to pay credit card bills on time or have delayed paying EMIs. In such cases, banks may refuse to give you a loan.
There are certain ways you can improve your score:
• Always pay EMIs (Equated Monthly Installments) on or before the due date. Don't miss the payment deadlines for credit card bills.
• It is advised that having the right credit mix of secured loans (such as home loans and auto loans) and unsecured loans (such as personal loans and credit cards) can help you build a good credit score.
• Consider applying for new credit only when you need it. Frequently seeking credit gives a bad impression to the lenders, and more debt can bring down your credit score. Improve your credit score by first repaying a loan and only then seeking another one.
• Track your credit history throughout the year and ensure no discrepancies. Credit bureaus can sometimes make errors while updating the records. In this case, you must ask your lender to update the credit bureau with the right information so that it does not affect your credit score.
• You can also improve your credit score by opting for a longer tenure while taking a loan so that the EMI is low. This will allow you a longer period with low EMIs for loan repayment. In such cases, you would rarely miss paying an EMI.
Having a good CIBIL score helps you to secure a loan smoothly and even at lower interest rates in many cases. Also you can get a loan for a higher amount if your CIBIL score is good.
