CIBIL score is a 3-digit numeric expression that sums up your credit history. CIBIL stands for Credit information Bureau India limited. It is a number ranging from 300-900, the closer your score is to 900, stronger is your credit profile. Low CIBIL score plays a vital role for those who are in need of a personal loan or credit card.
Suppose two individuals with credit scores 806 and 550 respectively apply for a personal loan. Depending on the credit history, Bank will screen the individual with an 806 credit score for further evaluation, while the application with credit score of 550 may be rejected.
An individual having a low credit score should make sure that he has filed IT returns at the end of an assessment year. This might help him avail loans in nationalized banks. While, on the other hand many other banks can still sanction loans for low CIBIL scores based on their credit policies.
It is always advisable to know your credit score before applying for a loan. It will help you understand what a lender would look at while evaluating your application. It also helps you rectify any kind of inconsistency in your CIBIL reports. On purchase of CIBIL report, you receive a “NA”, because of the absence of an active loan or loan history.
There are few tips to increase your CIBIL score:
- Check the status of the accounts
A “written off,” account can still be viewed as a negative account by a lender. It is always better to take a “No Objection Certificate,” once the repayment of loan is done.
- Check the payment history of every account
Go through the bank statement. If you have missed out any payments then initiate their payments right away. This will improve your credit score.
If for any reason a payment has been missed earlier because of loss of job or other circumstances, it is advisable to quickly payback debts to the bank when your financial situation is better as we cannot predict the future. A perfect credit history will offer better credit terms in future.