If you were looking to apply for a personal loan in India to meet your urgent financial needs, then you need to know the importance of credit score. Yes, your CIBIL score or the credit score is the first thing that your creditor checks.
CIBIL score is the mirror of your creditworthiness and it can help you in getting the loan approved or rejected. If you want to know about the significance of credit score and ways to improve it, then here is a quick post that you can go through. Read on!
What is credit score and the significance of it?
Your credit score is a 3-digit number that is awarded by TransUnion CIBIL. It is measured on the basis of your paid dues for ongoing and closed debts. Based on these findings, you are provided with a higher or lower CIBIL score. Anything that reads 750 or more is a healthy credit score. If your credit score is 750+, then you will feel no issues in getting a loan approval at their earliest and at lower rate.
The importance of your CIBIL score is known when you apply for a personal loan with a lender. Since a personal loan is an unsecured loan, you don’t need to put down any collateral or asset to get the loan approval. It is your CIBIL score that determines your eligibility for a personal loan.
Hence, you always need to have a higher CIBIL score if you are looking to get approval for a quick personal loan at a lower rate.
A personal loan is one of the easiest financial modes to look up to when you need funds. Therefore, having a robust credit score of around 750 and more means that you are sorted. Based on your requirements, you can borrow an amount as high as up to Rs.25 lakh from leading banks and non-banking finance companies (NBFCs).
What are the proven ways to increase your credit score?
- Stay on top of your repayments
You should know that when your debts are in green, your lenders know that you are responsible with your credit. You should always ensure that you don’t miss any payments or delay it; else your CIBIL score will remain lower. One of the proven ways to ensure that your CIBIL score remains strong is staying on top of your payments. To ensure that there are no missed payments towards existing loans and credit cards, you can set reminders.
- Ensure to correct mistakes on your CIBIL report
You may find some mistakes on your credit report, and hence; it may hamper your chances of future loans. You should ensure that there are no mistakes on your report so that your chances of loan approval are not rejected by a lender.
- Don’t apply for too many loans at a time
When you apply for a loan, a lender pulls out your CIBIL score to process your application. Hence, when you apply for too many loans at a time, it may lower your credit score and hamper the chances of your loan approval. Thus, ensure to apply for a loan at a time. Even if you are rejected, be patient and wait for 3-6 months before applying with a creditor once again.
The importance of the CIBIL score, along with the ways to increase is discussed. Following all will help you approach your next loan with confidence.
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