CIBIL Score Archives -

How Can You Get Your Loan Approved with a Low CIBIL Score

Thu, 05 Jan 2023 15:50:58 +0000

The Buyt Desk

CIBIL score is the indicator of credit history. A good CIBIL score, i.e., above 700, indicates that the individual had repaid the borrowed loan to the bank responsibly and thus has a good credit history. A low score, i.e., below 700, reflects that the individual has not returned the borrowed money responsibly and has a bad credit history. Financial institutions and non-banking bodies use the CIBIL score to find the credit history of loan applicants. Based on the findings, they decide whether to process a loan application or drop it.

How to get a loan application approved with a low CIBIL score

All banking and non-banking institutions process loan requests after checking the CIBIL score. The likelihood of getting a loan approved with a low CIBIL score remains the least. But what if you need a loan for an emergency? Or what if you are a person having no credit score? How would you get the loan? Well! There are ways present to get a loan in these scenarios too.

Apply with a Co-applicant – Add a co-applicant to the loan application. The co-application could be your spouse or parents with good credit history. It will reduce the credit risk as the co-applicant becomes equally responsible for the loan repayment.

Apply at Fintech Lender – A rejected loan application at a bank further downgrades the CIBIL score. So, do not directly go to the bank until you are sure of getting your loan application approved. The non-banking financial company is another door you can knock on to seek a loan. They have a relaxed policy for loan approval than banks, and they also consider the application of individuals with a low CIBIL score. However, for this facility, they charge a higher interest rate in comparison to banks.

Request For Small Loan – Banks don’t want to risk their money by giving a loan to people with poor CIBIL score. Thus, being hopeful for getting a higher loan request approved is wrong. If it is not an emergency, request smaller loans, and repay the amount as per policy. It will strengthen your score and make you eligible for bigger loans in the future. If your credit score is not extremely low, the loan request might get approved for a lower amount.

Opt For Secured Loan – Secured loan is when you put something on the mortgage. It is also called a mortgage-backed loan. Examples of this are gold loans, loans against property, etc. For such loans, lenders do not consider CIBIL scores as they have the security to recover their money. These loans also help to improve the credit score, provided the applicant repays the amount according to the policy terms.

Get a Guarantor – The guarantor is like having a co-applicant, but the person could be outside of blood relation. If the guarantor has a good CIBIL score, banks often approve the loan application as the responsibility of repaying the loan lies on the guarantor too.

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Habits That Can Make Or Break Your CIBIL Score

Wed, 29 Dec 2021 12:38:56 +0000

The Buyt desk

A good credit score is a statement of good financial behaviour. This score is very important if you want to take out a loan in future. The 3 digit score ranges from 300 to 900. A Credit Score closer to 900 is considered good and a score closer to 300 can make it difficult for you to get any loans. Banks and institutions even decide the interest at which you get your loan based on your credit score. Two individuals can get the same amount of loan on different interest rates depending upon their credit score. A credit score above 750 is considered excellent whereas a score less than 630 is considered bad.

A bad credit score means that the financial institutions and banks will not be comfortable in offering loans. If you get a loan you will be paying more interest on the loan.

Discipline Your Financial Habits

If you take wise steps to manage your credits you could take care of your credit score. Here are a few things that you must do-

1) Credit Card

If you have a credit card ensure that you don’t delay credit card bill payments. Don’t get comfortable with the minimum due payment option. Every time you delay the payment by using the minimum due option your credit score gets impacted. Usually, a credit card gives you a buffer of 30-45 days. You must ensure that you make the payment in the given time. Do not exceed your capacity while spending. Overspending beyond your capacity will push you to extend the payment deadline. The payment for the credit card is 30% of the credit score.

2) Credit Utilization

Credit utilization refers to the extent to which you utilize your available credit. In the case of credit cards, it is seen that what is the limit of the card and do you use it fully? In the case of a loan, it is seen how much loan balance is left of your loan. Ideally, you should not fully exhaust the credit limit and the usage should be 30-40%. Credit Utilization makes for 30% of your credit score.

3) Credit Hungry

A consumer is called ‘credit hungry’ when he/she makes frequent loan enquiries. It has the potential of ruining your credit score. When you make a serious enquiry about the loan the bank will check your credit credential. But if you have gone to many other banks too and all of them check your score this could be bad news for your credit score. This shows that you are struggling to get a loan and are running from one bank to another. This behaviour will impact your credit score by 20%.

4) Credit Mix

The more the merrier but this doesn’t stand true as far as loans are concerned. Too many loans can spoil your credit score by 10%. You must have a balance between secured and unsecured loans. If there are too many unsecured loans in your portfolio and you are also paying a huge car loan or a home loan you must be careful. This could disbalance your credit score.

5) Loan Guarantor

Never become a loan guarantor based on friendship or acquaintance. If you do want to become a guarantor then you must definitely check the credential and payment capacity of the person. A loan default by another person can cost you dearly if you are the guarantor. This type of default can affect your credit score by up to 10%.

So keep these five things in mind and move towards a good credit score.

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How To Maintain A Good CIBIL Score?

Wed, 07 Apr 2021 04:57:26 +0000

The Buyt Desk

For a few credit card users, credit is a horrible experience and for some, it is life-saving. The reason why a few users end up considering it a painstaking liability is they are unable to manage it properly. A mismanaged credit card at first impacts the CIBIL score. And the poor CIBIL score reflects poor credit history. On the other hand, a good score shows users’ financial fitness.

What is CIBIL Score?

The CIBIL score is the score of the customer’s credit. It is three digits numeric summary that show the customer’s credit history as well as the credit profile.

TransUnion CIBIL (Earlier Credit Information Bureau (India) Limited) is the authorized company that collects customer information. The company calculates the score based on details they find in a customer’s Account and Enquiries sections of the CIBIL report. This includes loan account, payment status, outstanding amount and day past the due date. The CIBIL score ranges from 300 to 900. The CIBIL score closer to 900 is excellent. A score ranging between 550 to 700 is considered fair and a score between 300 to 549 is considered poor, a score belonging to the fair and poor category can be made better.

If the CIBIL score is poor, one can improve it following some basics of loan payment method and what goes into the CIBIL Score.

How Is CIBIL Score Calculated?

If you will know the factors that impact your CIBIL score it will help you in maintaining a good score. The five important pieces of information that are used to calculate credit card score are

The payment history
Credit mix of secured and unsecured loan
Enquiries
Age of credit
Recent credit

A CIBIL score is calculated based on thirty-six months of credit history.

A good CIBIL score gives you many advantages, such as it helps you saving money on insurance, security deposit on new utilities, cell phone services and much more.

A credit card is a good thing if you are using it with complete responsibility. There are some proven ways to manage CIBIL score, we are listing them here

Keep A Check On Your Credit Utilization Ratio

The credit utilization ratio is the calculation measuring credit usage against the credit limit. This ratio should be 30% to ensure credit score remains stable. To ascertain this, keep your spending lowest possible with the credit card. E.g. If your credit card limit is 25 thousand, then don’t spend the full limit every month, use only 30% of it.

Do Not Cancel The Old Credit Cards

Do not throw away the card just because it’s old. If you will be able to pay bills and maintain the card, your credit card score will get better and better. A better credit score will fetch you numerous advantages in the long run. E.g. your loans will get instant approval, you might receive cards of higher credit limits, etc.

Manage Your Debt

Credit card balances are not the only contributor to CIBIL score. Loans on your name, lines of credit cards you are using and other financial history impact your debt level. Too much debt can cost a bad CIBIL score. Thus, lower your debt to keep your CIBIL score good.

Don’t Be In Rush To Apply For Credit Cards

The widening of the loan market has made too many options available for the loan. But this doesn’t mean that an individual can apply for as many loans as he/she wants. Apply for a loan or card only where there is a necessity. Also, when applying for a loan, check all terms and conditions carefully. Rejected applications negatively affect the credit score. So, before applying for the loan, check eligibility criteria, terms and conditions and other minor details carefully.

Check Your CIBIL Report Regularly

Sometimes it happens that the lender forgets to inform CIBIL about the closure of the loan, especially in the case of a missed payment. There are other factors as well that could ruin your CIBIL score, such as theft or fraud with a credit card, wrong information shared, etc. Regular checking of CIBIL score will bring the matter to light and lets you correct the mistake.

Create A Healthy History Of Credit

If you haven’t taken any loan in the past, then your credit score would be low. To improve your score borrow a healthy mix of credits that includes both secured and unsecured loan of long and short tenure.

Now that you know the factors that influence CIBIL score and how to improve score don’t be scared of loan and credit card, however, take loans and credit card only when it is necessary, and use the facility with complete responsibility.

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Worried About Credit Score? Find Out How to Improve Your CIBIL Score

Sun, 18 Oct 2020 17:00:38 +0000

By Priyanka Sambhav

When you apply for a loan, your past financial behavior plays an important role. There is a background check of your financial reputation- which means lender looks at debt repayment history, kinds of loan that you have availed in the past or do you have any ongoing loans.

When a lender makes funds available to the borrower, he wants it to be returned. To test the borrower’s payback capability, the financial institutions assess Credit Information Report (CIR) also known as the credit score which is based on data collected from lenders. This makes the borrower understand the creditworthiness of a borrower. Higher the score better are the chances of getting a hassle-free loan.

4 credit agencies in India provides credit score namely TransUnion CIBIL Experian, CRIF High Mark and Equifax. CIBIL was the first company to start this and gained so much of popularity that CIBIL became synonymous of the credit report.

How is Credit Score achieved?

A credit score is an assessment of a person’s financial behaviour, and it is a 3-digit number which ranges from 300 to 900. The closer your score is to 900, the better are your chances to get the loan approved.

This score is calculated based on four components: payment history, credit mix, multiple enquiries and credit utilization.

Around 50% of CIBIL score depends upon credit mix and credit exposure. Credit mix implies the number of secured and unsecured loans that you have. Credit exposure is the measurement of the maximum potential loss to a lender in case you fail to repay the loan. It also takes into consideration your outstanding credit. Your credit utilization behaviour is also an essential factor.

Other factors impacting the CIBIL score is how you are using your credit, timely repayment of loans, and how much credit you have used in the past two years.

However, a high credit score doesn’t guarantee a loan and neither a low score will end the chances of securing one.

Loan Restructuring & Credit Score

The COVID 19 pandemic has hurt repayment capacities of many borrowers, and they may be planning to opt for loan restructuring scheme. Those facing difficulty in servicing their loans will get an extended window of two years to repay the loan. As part of the restructuring exercise, RBI has allowed a two-year moratorium benefit to COVID19 hit loans. This would immediately lighten the loan burden but do note that banks will report these loans as ‘restructured’ loans to credit bureaus and will have an impact on the credit score of the borrower. Though banking experts feel that even if borrowers have to take the restructuring and their credit score dips, they need not worry if they repay the loan in a disciplined manner. For future loan eligibility instead of the credit score, it will be the credit repayment history of the restructured loans that will be the deciding factor.

Do this to keep your credit score healthy

Here are a few tips that can help you –

Make payment timely whether loan EMI or credit card dues pay on time.
Keep a balance between secured & unsecured loans. Secured loans include home loan, auto loan, etc. Unsecured loans include credit card payments, personal loan without a mortgage, etc. Avoid multiple loans in shorter period.
Do not excessively seek credit or you may give the impression of a ‘credit hungry’ borrower. Moderation is the key.
Control your credit utilization. Ensure lower utilization than full and going over-limit will have an adverse impact.
Monitor your co-signed, guaranteed, and joint accounts too. A credit default by someone else on whose loan you are just a guarantor will be not good for your score.
Always borrow in line with your payment capacity.

Keeping an account of your credit performance and CIBIL score on a monthly or quarterly trench will help you understand and reform your financial behaviour for the better. It will come handy when you will be applying for loans as you will know your profile better.

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