By: RAVI HARI, Senior Writer
CIBIL (Credit Information Bureau India Limited) is a Credit Information Company (CIC) that maintains records of an individual's credit and loan history, and if payments were made on time. A score is determined on the basis of this.
The general range of CIBIL score is between 500 and 750+. If one is in the 750+ score range, there are excellent chances of availing to oneself a home loan, personal loan and a credit card.
A score above 750 shows that a person can repay his/her loan and credit due on time. And, banks check an applicant’s CIBIL score before approving a loan or a credit card.
Applications for home loan, personal loan and credit card get rejected from banks if there is low CIBIL score.
Thus, not being credit healthy is a negative aspect, and banks do take a serious note of this, as it implies that the person may default on payments that would be due on loan or credit card.
Here are ways to increase your CIBIL credit score:
- Pay your credit card bill before the due date
- Pay your loan installments on time. (Default on payment of loan will reduce your CIBIL credit score).
- Avoid paying bills after due-date
- Bill dates to be structured in such a way that payments can be done in the first week of every month (i.e., when you get salary in your account)
- Put reminders on your mobile phone so that you do not miss the payment due date
- Auto-pay option is a good one. You know that the bill with respect to every month would be more or less in an approximate range
- Avoid buying things/articles/goods that you cannot afford (because if you default on payment towards these things, you go into debt and it reflects badly in CIBIL score)
- Purchases that involve high amounts should be planned in such a way that they should be bought when there are discounts in stores (normally during festive seasons or special days)
- Do not take credit card without verifying about its details (Storing more credit cards means sometimes going beyond the means and thus falling into debt)
- Purchases involving high amounts need to be done using a credit card, only when you feel you would be debt free when the due date for payment approaches
- If you have a bad spending habit, instead of closing the card, keep at a safe place at home and do not carry along as the non-usage of the card automatically keeps a tab on your splurging habit.
- Minimize extra expenses. Purchase goods that are needed
- Do not apply for back-to-back loans. Apply for new loans, personal loans, credit cards only when you require them (because there is a fear of going default)
- If your application for a credit card or a home loan is rejected due to low CIBIL score, instead of applying for them again in a short period, try to improve the score and then be in a credit worthy position to avail loans
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