Credit score is an essential financial indicator that reflects your creditworthiness and financial discipline. CIBIL score is a three-digit number that reflects your credit history. Lending institutions use it to evaluate your creditworthiness before approving loans and other credit-based financial products.
Several factors influence a CIBIL score, such as credit utilisation ratio, credit history, repayment history, credit mix, and credit inquiries. By understanding how to check the CIBIL score, individuals can work towards building and maintaining a good credit score, which is essential for their financial well-being.
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Listed below are the influencing factors that affect CIBIL Score
- Length of Credit Record: A long credit history implies you have managed credit responsibly for some time. This makes you a less risky borrower and increases the chances of lenders approving your loan or credit application. Credit record shows that you have been making timely payments and managing your credit well.
- Credit Repayment History: The credit repayment history is crucial in determining your credit score and creditworthiness. It is an insight into your ability to make timely credit repayments and is considered the most important component when evaluating your credit score.
- Credit Utilization Ratio: The credit utilization ratio is a crucial factor that determines your creditworthiness. It provides insight into your spending and borrowing habits and how you use credit responsibly. By knowing the steps of how to check the CIBIL score you can check your credit utilization ratio regularly.
- Credit Mix: When it comes to credit scoring, the mix of credit accounts in your loan portfolio is an important factor that lenders consider. A diversified mix of secured and unsecured credit lines is generally viewed positively by credit bureaus.
- Debt to Income Ratio: The debt-to-income ratio is a key metric lenders use to assess your creditworthiness when evaluating your loan application. It measures the percentage of your monthly income required to cover your debt obligations, including loan EMIs, credit card bills, and other debt payments.
By knowing how to check the CIBIL score on Bajaj Finserv Credit Pass, you can easily access your credit report and analyze your debt-to-income ratio.
- Outstanding Debt: Outstanding debt is one of the most significant factors that can negatively impact your credit report. It refers to any unpaid balances on your credit accounts, including credit cards, loans, and other lines of credit.
- Applying for Multiple Credit Products: It is important to note that applying for new credit or a loan can result in a hard inquiry that negatively impacts your credit report. If you are concerned about your credit score, knowing how to check the CIBIL score is important.
By monitoring and knowing how to improve CIBIL score immediately, you can identify issues that may be hurting your credit score and take the necessary steps to improve it.
How to improve CIBIL score immediately
- Pay bills on time and in full: Late payments negatively impact credit scores. Paying bills on time and in full can boost the score.
- Reduce credit utilization ratio: High credit utilization ratios can indicate credit dependency, which can hurt the score. Reducing credit utilization ratio to below 30% can improve the score.
- Maintain a healthy credit mix: A mix of secured and unsecured loans can positively impact credit scores. Hence, having a healthy credit mix e.g., a credit card and a loan can boost the score.
- Monitor credit report regularly: Understanding the process of how to check the CIBIL score and regularly reviewing credit reports for inaccuracies, discrepancies, or fraudulent activity can assist in detecting potential issues that may negatively impact the credit score.
- Avoid multiple loan applications: Multiple loan applications within a short period can signal credit dependency and reduce the score. Hence, it is advisable to avoid applying for loans frequently.
- Maintain old credit accounts: The length of credit history can impact credit scores. Keeping old credit accounts can boost the score.
- Settle overdue debts: Settling overdue debts can boost credit scores, indicating responsible debt management.
Conclusion
CIBIL score plays a crucial role in determining an individual’s creditworthiness. Several factors influence it, such as credit history, repayment history, credit mix, credit utilization ratio, and credit inquiries. A good CIBIL score can result in better loan terms and lower interest rates, while a poor score can make obtaining loans or credit cards challenging.
It is important to learn the steps of how to check the CIBIL score on Bajaj Finserv Credit Pass and improving a CIBIL score takes time and effort and is not an overnight process. However, by following the right strategies and learning more about how to check the CIBIL score, individuals can achieve their desired score and enjoy the benefits of good credit.