Nowadays, it has become common to take a loan for everything from buying a house to buying a car. But do you know that how easy or difficult it is to get a loan depends on your CIBIL Score. CIBIL Score is a number that reflects your credit history. This number tells how well you repay your loans.
What is the CIBIL Score
CIBIL Score, i.e. credit score, is a kind of report card of your financial health. It tells how you took a loan in the past, repaid it, and how reliable you are. CIBIL Score is a number that tells how well you repay loans. This number ranges from 300 to 900. The higher the number, the better.
Main factors affecting CIBIL Score
Loan amount
If you take a small amount of loan, it does not affect the CIBIL Score much. But taking a large amount of loan, especially if you are taking multiple loans, can have a negative impact.
Number of loan applications
If you apply for a loan at many places at the same time, it can hurt the CIBIL score. Therefore, do not apply more than necessary.
Loans from small companies
Taking loans from small, unauthorized companies can be risky. If you are unable to pay the EMI on time, the recovery process of these companies can be harsh, which can affect your CIBIL score.
Multiple loans at once
Taking multiple loans at once makes your credit capacity look low. This can also affect the CIBIL score.
Tips to increase CIBIL score
Pay EMI on time: This is the most important.
Wise use of loans: Do not take more debt than necessary.
Correct credit card usage: Pay the bill on time, and do not use more limits.
Do not overuse credit cards: Its excessive use can negatively affect the CIBIL score.
Regular check of credit report: If there is any mistake or discrepancy in your credit report, correct it immediately.
CIBIL Score is an important factor that impacts your financial future. To increase it, borrow wisely, make timely payments, and keep an eye on your credit report.