Are you CIBIL ready

In an inter-connected market, your credit score matters a lot…

Have you ever wondered why your credit card application or loan application got rejected? Have you also wondered why your loan and credit card sanctions are for lower values that you desire? The answer could be your credit score or CIBIL Score.

Know your credit score…

The moment you take a credit card or a loan your background and repayment data is shared by the lender with CIBIL. The Credit Information Bureau of India Ltd. (CIBIL) is the repository of credit information of Indian borrowers. Your credit score is a function of factors like; the extent of leverage, proportion of high cost debt, your repayment track record, number of cheque / ECS bounces, loan rescheduling etc… Normally a credit score of 700 and above is considered loan-worthy, while a score of 750 and above is considered to be credit worthy. You may be surprised to know that 90% of all lending happens to borrowers with a CIBIL score above 700.

How you can enhance your score…

Actually there are a lot of small precautions you can take to enhance your credit score. Ensure that your overall debt is not substantially more than your assets. A greater proportion of secured debt like home loans, car loans have a higher credit value compared to unsecured debt like personal loans and credit cards. You may be surprised to know but even delaying or defaulting on your utility bills can have a negative impact on your credit score. So can you enhance your credit score?

Of course you can! Repay your high-cost unsecured loans first. Once the loans are closed, take a proof of closure and submit it to CIBIL. This will work towards enhancing your credit score. When one loan or card gets rejected, don’t get aggressive and apply for multiple such loans. It will only worsen your credit score.

Your credit history is not private…

The bottom-line: If you believe that your credit history is a matter of private record, you are mistaken. Every financial institution has access to your credit score, your credit history, your repayment track record etc. With PAN becoming a compulsory link document for all credit transactions, it is very easy to track your credit status in one go.

As a borrower, there are certain key lessons for you. Maintain a clean repayment track record. Intimate CIBIL on the closure of any loan and let it reflect on your credit score. More importantly, try to be as transparent as possible with your lender. Trying to conceal information or presenting false documents can only worsen your credit score. Your credit is in your hands! ©

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