Nowadays, credit cards are a part of a major number of people allowing them to buy at the moment with the flexibility to pay later. Similarly, loans are a saviour when there is a shortage of money for starting a business, buying a new house or others. Credit, in any form, is simply a way that allows the borrowers to meet their financial expenses for the time being, with the liberty to repay later.
While financial credits are helpful to the borrowers in the long run, they involve long documentation and approval processes. Apart from the provision of all the required documents, a good CIBIL score tops the list of the eligibility conditions for a loan/credit card. But what is CIBIL score? How can you check your CIBIL score?
Let’s find out answers to these questions below!
What is CIBIL Score Rating?
A CIBIL score is a three-digit numeric summary that defines the credit history of the user. The score is generated on the basis of various factors such as the user’s payment history, late payments, outstanding amount, etc. Lenders, banks and financial institutions always analyze the user’s CIBIL score before rejecting or approving a loan application request.
- The CIBIL score ranges from 300-900
- CIBIL rating, closer to 900 is considered excellent whereas a CIBIL rating between 650 and 750 is considered fair
- Ratings lower than 650 are considered poor
- A good CIBIL score represents a user’s responsible credit payment behaviour
- People with good CIBIL score get easy loan and/or credit card approval
How To Check CIBIL Score?
To check the CIBIL score, you can either log in to the official website of CIBIL or check your CIBIL rating on the Paytm mobile application. All you need to do is to follow a few easy steps-
- Log in to the Paytm mobile application
- Navigate to ‘Featured Section’
- Click on ‘See All’ and then CIBIL Score’
- Next, add all the details (If you are a first time user, you will receive an OTP on your registered mobile number. Enter the OTP and proceed with credit score)
- Generate your CIBIL score
What are the Factors Affecting the CIBIL Score?
Some of the factors that negatively affect the CIBIL score are-
- Irregular payment history
- Delayed and/or outstanding credit balances
- Higher use of credit utilization ratio
- Multiple hard inquiries within a particular time period
- Mismanagement of secured and unsecured loans
- Comments in the Credit report
How To Improve CIBIL Rating?
There are multiple factors that impact the CIBIL rating negatively, which further hinder the process to acquire a loan or a new credit card. Thus, it is important to figure out the issue and then work to resolve it in order to avoid the rejection of a credit application.
Listed below are a few basic practices one should follow religiously to improve CIBIL rating-
- Make timely credit payments
- Make all your credit payments before the due date
- Always settle the credit amount in full
- Do not neglect any remark given on the credit report
- Create a healthy balance between secured and unsecured loans
- Don’t make multiple hard inquiries within a smaller period of time
- Use the credit utilization ratio wisely
- Use your old credit card as long as it is feasible (the past payment history helps in building a credit score)
- Repayment history
- Credit utilization ratio
- Duration for availing credit
- Credit mix
- Credit inquiries