Never need to take a loan? Or is the thought of making credit cards? If yes, you must have heard the name of CIBIL Score. This score is a mirror of your financial health. The bank or any loan company first sees how your CIBIL score is.
What does CIBIL score mean?
Simply put, it is a number of 3 digits, between 300 and 900.
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300 to 550: It is considered ‘bad’. It is very difficult to get a loan.
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550 to 650: This is ‘average’. The loan can be found, but perhaps not on good conditions.
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650 to 750: This is a ‘good’ score. The possibility of getting a loan increases significantly.
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750 to 900: This is a ‘very good’ score. You can get a loan at easily and good interest rates.
The direct thing is, the more the score, the more reliable you are in the eyes of the bank.
What reasons do the CIBIL score deteriorate?
Many times unknown mistakes can hurt your score. As:
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Not paying the bill of EMI or credit card on time.
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Default a loan or ‘settle’ with the bank.
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To use a lot of credit card limit (usually more than 30–40%).
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If you have taken a joint loan with someone, and the other person made a mess in the payment.
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You have become guarantors in someone’s loan and they did not repay the loan.
Due to all these reasons, your credit history gets bad and it becomes difficult to get a loan when needed in future.
How to improve the deteriorating CIBIL score?
If your score is reduced, do not panic. It can be improved, just need a little hard work and patience:
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Timely payment: This is the most important step. Pay all your EMI and credit card bills before the date. Do not delay a single day.
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Credit card wisely used: If there is a credit card, avoid spending more than 30% of his limit. Always repay the bill, not just the minimum amount.
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Avoid more loans: Avoid taking frequent, especially small unseeded loans (such as personal loans). First focus on repaying the old loan. Do not even take too much loan.
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Get the loan settlement ‘close’: If you have ‘settle’ a loan (ie, you have stopped the account by paying less than the entire amount), then try and get it ‘close’ by paying the remaining amount.
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Think before becoming a guarantor: Think a thousand times before guaranteeing someone’s loan. If he misses, your score will also drown.
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Caution in joint loan: While taking a joint loan, take care of the partner’s payment history.
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Check the report: Please check your credit report once or twice a year. See if there is any mistake in it. If there is a mistake, immediately contact the CIBIL or the concerned bank and get it fixed.
The biggest question: How long does it take to improve the score?
This question happens in everyone’s mind. See, improving CIBIL score is not a one or two work. This happens slowly.
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Usually, if you strictly follow the above mentioned things, then the score is visible 6 months to 1 year It may take time.
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If the score is very bad (eg below 500), then it More than 1 year May also be felt.
Therefore, be patient and maintain good habits. Do not expect miracles overnight.
What to do if the CIBIL score is minus (-) or 0?
Sometimes the score shows minus (-1) or 0. This does not mean that your score is bad. This means that you do not have any credit history! That is, you have never taken any loan or credit card till date. In such a situation, the bank does not understand whether to trust you or not, so they hesitate to give loans.
There are two easy ways to fix it and score:
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Take credit card: Take a basic credit card from a bank. Use it a little (eg small expenses of the month) and the bill always fill the entire time. In a few months your credit history will start to be formed and the score will be generated.
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Take a small loan on FD: You can get a small fixed deposit (FD) of 10-15 thousand in the bank. Then you can take a small loan (of about 70-80% value) instead of the same FD. Pay this loan on time. This will also make your positive credit history and the score will increase quickly.
Hopefully now you have understood better about CIBIL score and improving it!
