In the absence of instant finance, consumers often opt for using the credit cards and loans aiming that will help them to sort out their financial problems and support to achieve their dreams and short life goals. Well, to achieve a credit card, the Cibil score matters the most. To avail credit cards, an individual’s Cibil score is one of the most important factors that matter the most. To start with, let us first understand what is the Cibil score, and what are the factors that influence it?
What is a Cibil score?
A Cibil score is defined as a consumer’s credit score. To explain it in simple terms, it is a three-digit numeric summary of any consumer’s credit history which reflects on the consumer’s credit profile. A Cibil score is derived from evaluating the past credit behaviour of borrowing or repayment habits of an individual. These details are derived from banks and lenders that are shared with Cibil on a regular basis.
A few factors are considered while evaluating a Credit score like accounts and enquiry sections of the Cibil report, loan accounts and credit cards, outstanding amount, number of days past the due date, payment status, etc.
An individual’s past history in paying credits is taken as an indicator to figure out his/her future ability to pay off credits. In short, a Cibil score reveals a consumer’s creditworthiness. Cibil score is one of the essential factors for the lenders to check the credit profile while deciding for approving credits to any individual.
What is the Cibil report?
A Cibil report or a credit report, both means the same, is a consolidated report that defines the consumer’s credit summary, loan account information, employment information, and personal/contact information. Cibil score and Cibil report, both are considered important by lenders while assessing a person’s loan eligibility.
What factors impact a Cibil score?
A Cibil score is figured out by scoring algorithms taking into account various data points and macro-level credit trends. Thirty-six months of credit history is taken into account inclusive of payment history, enquiries and credit utilization, credit mix of secured and unsecured loans, duration of the existing credit history, transaction history of the existing credit cards, duration of outstanding balances, new accounts opened or closed and the ratio of payment paid to the total amount due.
How you can improve a Cibil score?
You can improve your Cibil score through different methods but it takes time. Sometimes, it is feasible that even after adding immense efforts to improve your Cibil score, you might not get the desired results. Thus, often it is advised to hire an agency that serves to improve your Cibil score. These companies hire a team of professionals who consistently put efforts to improve and boost your Cibil score.
In any case, if you agree to hire professionals from an agency, the first thing you need to understand that you need to stay patient as it consumes time. Even the professionals have their ways and require some basic essential to improve your Cibil score. They require to dig out each data and evaluate the strategies to bring remarkable changes in your Cibil score. It might take a few months and often it takes years to improve a Cibil score.
On the other hand, people keep views that instead of paying to the companies, they personally can take charge of the task. Here, it is advisable to seek professional guidance. These people being experienced professionals have access to the important resources and the required knowledge to proceed and complete the task much faster than you can. There is a huge probability that without professional guidance the achieved Cibil score may fall down within a short duration. These professionals not only provide you the plans and techniques but also assist in the future to keep improving and boosting your Cibil score.
In addition to the above solutions, you need to focus on the following points:
- Paying dues timely as late payment is recorded by the lenders
- Control your credit utilization
- Maintain a healthy mix of secured and unsecured loans
- Keep monitoring your joint, co-signed, and guaranteed accounts monthly. Any mishandling of these accounts by other partners can affect your ability to access credits when you need it.
- It is essential to review the credit history at least once in a year. Keep checking your Cibil score and report to avoid any inaccuracies and unpleasant surprises like a rejected loan application
From the above discussion, it is clear that maintain a good Cibil score is essential and it requires immense efforts throughout. To keep your financial goals a pretty, you need to work to maintain a Cibil score of +750 plus a healthy Cibil report. To have access to credit in times of need, you should keep monitoring your personal and loan accounts and hire professionals if required.
By – Nikhil Shendurnikar (Director, Debt Counsellor)