Blog

Benefits of maintaining a good cibil score

1. Loan with a longer repayment period

   If you have a high credit score, you may be able to obtain a loan with a longer repayment duration. A long-term loan will result in lower monthly payments. This will help you reduce your repayment load, allowing you to repay the loan on time.
   You can check your CIBIL score online by going to the CIBIL website and filling out an online application form. Because your CIBIL score is a crucial deciding factor in loan application acceptance, you must learn how to verify it.

2. Loan/Credit Card Approval in Less Time

   If you have the highest CIBIL score, you can receive a credit card with a higher limit. However, make sure you don't overuse your credit card and that you pay your bills on time. Your credit score may suffer in the long run if you do not comply.
   In addition to a high credit limit, if you have a strong credit score, you will be eligible for additional perks and incentives on your credit card.

3. Avoid making multiple loan inquiries or applications at the same time.

   Avoid sending multiple loan applications and inquiries to different lenders at the same time. It depicts you as credit-hungry and increases the number of hard inquiries on your credit report, lowering your credit score.

4. Avoid Debt Settlement:

   Always try to pay off your commitments in full and only settle as a last resort. While debt settlement may reduce the burden of debt, it also indicates a refusal to repay your commitments, which may have a negative impact on your credit score and future credit acceptance prospects.

5. Lower Rate of Interest

   Lenders are very careful before granting you a loan based on the risk profile and CIBIL score of the applicants; they need certainty to lend you money. As a result, applicants with a high credit score receive lower interest rates, providing lower interest rates on home loans for people with good credit.

10 ways to increase CIBIL score

1. Pay credit card bill on time

   One of the simplest ways to keep a healthy CIBIL score is to pay your personal loan EMIs, business loan EMIs, or credit card obligations on time. Many people feel that paying off the bare minimum will help them achieve a good CIBIL score, but the reality is exactly the opposite. When you pay only the required amount, you are simply avoiding a late fee. The following month, however, you will have to repay not just the previous month's outstanding bills, but also a significant additional interest plus any expenses you would have incurred in the new month.

2. Check errors in your credit report

   Check if your CIBIL report has any errors when it comes to the payments made or the loans closed.

3. Avoid taking multiple loans

   It is true that taking out many loans stretches one's financial capability; however, at what cost do you gain that capability? Frequently, it comes at the expense of not just several outstanding debts and hefty interest rates but also a "hard inquiry" on your credit report. A hard inquiry, as you may be aware, is an extensive investigation of one's credit profile requested by a possible lender to determine the quantity of debt and CIBIL score.
   Because each hard inquiry made on an individual or a firm lasts at least two years, too many loan applications will also result in too many hard inquiries, resulting in a low CIBIL score. Consider having your loan application rejected because of multiple queries on your credit score. Doesn't seem too promising, does it?

4. Increase credit card limit

   Another credit card usage technique that can help boost your CIBIL score is to limit the amount of credit you use. Using more than 30% of your available credit amount indicates "high credit use" and thus poor creditworthiness. This means that if you have a credit limit of Rs. 1 lakh, you should attempt to use only 30% of it each month, or Rs. 30,000.
   If you make all of your payments on credit cards and reimburse them at the end of the month before your next paycheck arrives, you'd undoubtedly know if you couldn't do it by only using 30% of your credit limit. In that situation, contact your bank and request a greater credit limit. This will boost your CIBIL score.

5. Maintain old debt records

   While removing entirely repaid debts from your records may seem wonderful, it is not a wise idea. It is recommended that you preserve records of former good debts in your accounts because this will represent positive historical credit behavior, a good CIBIL score, and hence easier loan approvals in the future.
   Another typical CIBIL score improvement hack utilised by firms is to maintain those strong accounts open that show a stable repayment history, as this provides a long-term boost to the CIBIL score.

Apply for a personal loan based on your CIBIL score from capital Now

Conclusion

Your credit score is a single number that can cost or save you a lot of money over the course of your life. A high credit score can result in lower interest rates, which means you will pay less for whatever line of credit you obtain. However, it is up to you, the borrower, to ensure that your credit remains solid so that you can access more borrowing possibilities if necessary.