Till now, you had to spend Rs 500 to Rs. 1200 to know your credit score or CIBIL score, but do you know, now you can check your CIBIL score for free? Yes! You can check your credit score on the official website of Credit Information Bureau, without spending a single penny and can quickly know that as per your CIBIL score, at what interest rate and monthly EMI, you can take the loan from the bank.
Why good credit score is important: In the recent years, almost every bank has changed its policies and added a clause for good credit scorers. According to it, good credit scores will not only help in getting the loan on easy EMI terms, but also will assist in getting concessions in interest rates. For example, People having CIBIL score more than 760 in home loans for Bank Of Baroda, will get the loan at 8.35% interest rate only.
If your CIBIL score is not good, then you may face hurdles in getting your loan approved. As per the latest policies regarding credit score, if your previous loan repayments and the transaction record is stable, then the bank can even lessen your monthly EMI.
Frequently asked questions about Credit Score: Due to lack of the proper information regarding credit score, many people have doubts regarding it, like, what is CIBIL Score, how much CIBIL score is considered good, how to check CIBIL report online and how to improve credit score?
There would be many who need to know how credit score is calculated, if one has done negligence in previous transactions and loan repayments how to handle this situation of lousy track record. Here, in this article, we are bringing an answer to each of these questions & that too in straightforward words so that you can understand each term easily.
If you still have any query to ask or have valuable information about CIBIL score to share with our readers, then you can post it in the comment section at the end of this article.
What is a Credit Score?
How does CIBIL Bureau work: Trans-Union Credit Information Bureau India Limited (generally known as CIBIL) is India’s first ever credit information company, which keeps the transaction record of loans and credit cards, as provided by the banks in India.
CIBIL keeps the record of all reputed banks, creditors, commercial bodies and not only this, more than 2400 financial institutions are part of it. CIBIL maintains a complete record of above 550 Million accounts & credit records worldwide. Amazed, right? This huge database is the very reason behind the high credibility of CIBIL credit scoring algorithm.
हिंदी में पढ़ें: सिबिल स्कोर कितना होना चाहिए
These records are submitted by banks and other creditors to CIBIL on a monthly basis, and this information is then used to prepare the Credit Information Report (CIR) of creditors and to decide credit score so that lenders can judge the loan application of person by their financial records.
Why is it necessary to have a good CIBIL score?
Credit/CIBIL score plays a significant role in the loan approval process in any bank. Whenever you fill a loan application form, then the lender bank or the lender company inspect each detail of your credit report regarding your previous loan history. After analyzing your repayment capacity, lenders decide whether to lend you a loan or not. If your credit score is too low, then the lender will immediately deny to give you any loan.
How credit score is calculated: In simple words, CIBIL score presents your credibility in financial dealings, that whether you have repaid the previous loan amount by following the guidelines of the bank timely or not. If you have not paid EMI correctly or have not paid the loan as per the terms and within the stipulated period, then this behavior may add up to a bad credit score and can have adverse effects on your future loan approvals.
How much Credit Score is good?
As per CIBIL, the measure of credit score can be from 100 to 1000 points. Points less than 650, are considered as poor, that means, if your score is less than 650 then you may face difficulty in getting credit cards and loans. On the other hand, points more than 750 are considered as a good credit score. You will not face any hassle in getting loan from various banks or getting the credit card if your score is above 750 points.
- Excellent Credit Score: 750+
- Good Credit Score:700-749
- Fair Credit Score: 650-699
- Poor credit Score: 600-649
- Bad Credit Score: below 600
What would be Credit Score if there’s no credit history
What if you never had a credit card or loan before: If you are applying a loan for the first time or applying for a credit card, then in the column of credit score in CIBIL table, N/A will be written. In this situation, the bank will check out your monthly income, bank statement of the previous six months and by estimating your payment capacity, the bank will set credit card limit or can approve or disapprove your loan.
How to check credit score online?
To know your credit score, go to the official website of CIBIL, https://www.cibil.com/freecreditscore/ and fill your PAN Number, Date of birth, monthly income and other necessary details and then click on submit. After submission, a new page will open up. Here again, you will have to fill your information; however, details regarding PAN card will automatically get filled.
After it, you will get an email from CIBIL, in which you will get a link and password for your CIBIL account. After clicking on the link, you will be directed to a new page, here do login by filling your email id and password that you got in your email. After getting logged in, you will be asked to change your password. After setting the new password, your CIBIL Account will be logged out.
Then, login again with your new password. After login, you will get your credit score. Remember, through this process of checking CIBIL score; you will get information about credit score only. For any further detail, you have to pay fees of Rs. 500 to Rs. 1200.
How to improve your credit score?
Although, it’s not an easy task to improve your bad credit, as it takes a huge time to cover up, yet, your continuous efforts to fix credit score can prove fruitful to you. Here are some essential points, you should consider to improve your credit score:
- Firstly, thoroughly review your credit report by requesting its free copy. By doing so, you will come to know all the loopholes, errors and other faults. In case of errors in the credit report, you can confidently tell your point to the credit bureau.
- Make your payments on time & set proper reminders for it. You can enroll to automatic fees and get your loan installments, or EMIs paid on time.
- Make a proper payment plan, wherein, mention your budget, all accounts, loans taken, their interests, etc. In this way, you come to know about credit with the highest interest & can manage to lessen loans by maintaining the accounts accurately.
- Don’t put a negative impact by delaying bill payments. If you have neglected it before, then start making bill payments on time. Your these efforts will fade the earlier negative implications.
- Anyhow, if you are facing problem in setting your credit score, then it’s better to take the help of a credit counselor. This way will help you improve your credit score.
- Outstanding debt is dangerous. So keep your credit card balances low always.
- Pay the credit card balance on time. Don’t delay.
- You can raise your scores, by showing unused credit cards, so don’t close these down.
- If you don’t need those, then don’t issue new credit cards. More accounts mean less average account age, as it can prove risky for credit scores. So, if you can manage credit within the short span, then don’t open new accounts.
These are pretty hacks to improve your credit score. If you follow these thoughtfully & don’t open new accounts often, make payments on time, don’t leave any outstanding credit card balances, then slowly, you will be able to get your credit report improved.
(With inputs from Komal Singla)