A CIBIL score is a number that impacts the amount of money you can borrow. In India, those with credit scores for at least six months to a year have a score that ranges from 300 to 900. A CIBIL score of 750 or more is considered excellent. On the other hand, a score of 700-750 will be considered satisfactory. A score of fewer than 650 points, on the other hand, is considered poor. Lenders will check their credit scores when they apply for a loan or a credit card. Before you apply, you should do a quick credit check. When you check your CIBIL Score on the credit bureau’s official website, you’re doing a soft inquiry. It may somewhat lower the score, but only by a few points.
When should you check your credit score?
If your CIBIL score is low and you have previously submitted an application without checking it, you should do it again. The lender can reject your loan, credit card, or other application.People are not aware of how to use their wealth properly. In today’s modern India, banks and financial institutes are here to help every citizen fulfill their dreams. Banks are here to provide you with financial help for all types of situations. It can be wedding expenses, financing a business, medical bills, purchasing a car, funds for a vacation, renovating a house, debt consolidation, unplanned medical expenses, or higher studies. Though, a frequent CIBIL score assessment may be required.
● Before taking out a personal loan or using a credit card, think about your options.
Before applying for a personal loan or credit card, you should run a credit check. Because it aids in determining the chances of obtaining credit. If your CIBIL score is 750 or higher, your loan or credit card application may be approved quickly. If it’s low, have a look at your credit report to figure out why. Credit ratings are frequently low due to nonpayment of credit card bills and loan EMIs. As a result, if your CIBIL score is low, you must first raise it before applying.
● Before you switch your current loan
Check your CIBIL score before moving your current loan to a different lender with a reduced rate. If you have a good credit score, you may be able to negotiate a lower interest rate. After you’ve completed the transfer, check your CIBIL score to see if it’s changed. A hard inquiry is placed on your credit record each time you apply for a loan. If the lender rejects the application, each hard inquiry has the potential to lower the credit score.
● Following the debt settlement
When a lender and a borrower agree on a lesser payment than the original loan amount, they have struck a debt settlement agreement. Although you are no longer responsible for the debt, it will appear on your credit report as settled. If you have sufficient funds, you may be able to have the tag removed if you pay off the entire loan in the future. You can go to the lender’s branch and seek payment of the outstanding late fee. After that, you’ll be able to view your credit report and compute your credit score.
● Getting a loan paid off
For example, paying off a home loan or any other loan could be a huge relief. However, do you know how it will affect your credit score? It is entirely dependent on your credit history and the credit company with which you are dealing. If the portfolio is largely unsecured, a credit mix with more secured loans may help to improve credit scores.
Financial stability with Good credit score
In your financial plan, your objectives and purchasing behavior are in sync. Set up an auto-deposit to a specific “emergency fund” savings account to accomplish your financial objective. When cash is placed into your checking account, it vanishes before it is spent. As a result, it is prudent to devise a spending strategy. After you’ve settled on a plan, put it to the test for at least a quarter and see how it performs for you. You won’t realise the benefit of keeping track of payments if you don’t.
- Reasonable interest rate : When your credit score is strong, you are entitled for a reasonable interest rate because it offers the lender trust in your debt time management skills.
- Offer credit cards filled with perks: If your credit score is good, banks may offer credit cards filled with perks such as large cashback and points on digital and offline transactions, enticing dining deals, and travel benefits.
- Mortgages Approved more swiftly: When a person’s credit score is strong, mortgages and credit cards are approved more swiftly.
- Negotiate with your financial institution : If you have a good credit score, you may be prepared to negotiate with your financial institution to increase your loan amount or reduce your rate of interest.
- Loans in an urgent situation: It helps to strengthen one’s credit record, enabling one to take out loans in an urgent situation.
The Bottom Line
It is necessary to keep a check on your CIBIL score before moving ahead to any financial activity or acquiring any kind of loan. In India, the CIBIL score represents the financial background of the borrower. A strong CIBIL score represents strong financial stability and vice versa. Therefore, you need to be very careful about your CIBIL score and its regular monitoring. To avail of a personal loan or a home loan, you need to have a strong foothold on your credit score.