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4 Important Factors That Decide Your CIBIL Score

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4 Important Factors That Decide Your CIBIL Score

Your CIBIL score is a significant factor that determines whether a financial institution will approve or reject your loan or credit card application. Credit rating ranges from 300 to 900, and the higher the score is, the more eligible you are for a loan.

In India, CIBIL is the organisation which financial institutions approach to seek an individual’s credit score. High Mark, Equifax, and Experian are other credit information companies providing credit scores. Check your free CIBIL score online for free within minutes at Bajaj Finserv.

Your credit score depends on your Credit Information Report (CIR), which contains various data about credit you have availed so far. Some of the factors in your CIR that decide your credit score include:

  • The utilisation of credit limit

Every credit card comes with a credit limit – the maximum amount that you can spend with it. Your credit score changes depending on how much of your credit limit you are utilizing.

For example, your CIBIL rating improves if you spend only 30% of your credit limit. On the other hand, spending too much with your credit card will lower your score.

  • Payments of loan EMIs

Paying your existing loan EMIs within the due date will increase your credit rating. Contrarily, having an overdue payment reduces the same. The overdue amount and the number of days it is past due may also impact your credit score.

Hence, make sure to calculate your EMIs before you opt for a loan. Using a personal loan EMI calculator is an ideal way to do so. 

Increase Your Score with a Loan

Many a time, individuals avail a small personal loan solely to increase their CIBIL ratings. You can apply for such loans from NBFCs like Bajaj Finserv. The lending company offers up to Rs.25 Lakh with tenors ranging from 12 to 60 months. You also need to provide only a few documents and fulfil minimum eligibility criteria.

Lenders will sanction a higher amount once your CIBIL rating is high. You may also get to negotiate your personal loan interest rates with the same.

  • Payment of credit card bills

Your credit card bill payment also impacts your CIBIL rating. Clearing the dues within the deadline improves it significantly.

Moreover, you must make sure it is the total amount due that you are paying.

The total amount due is the full amount you owe at the end of the month. The minimum amount due is another charge you can choose to pay. It is a particular percentage of the total payable amount. Paying this amount is helpful in case of cash shortages. However, doing so lowers your CIBIL score. Furthermore, your total due amount gets carried forward to the next month’s bill.

Improve Your Score with a Secured Credit Card

A secured credit card is available against a fixed deposit. Hence, credit card companies don’t need borrowers to hold a high CIBIL rating to avail of these.

Secured credit cards come with features similar to a standard one and are exceptional to improve your credit score.  

  • Credit enquiries

A credit enquiry by a lender follows each credit card or personal loan application. Financial institutions check your CIBIL rating and CIR with such enquiries. The credit score goes down with every such enquiry.

So, multiple applications and multiple enquiries affect your rating drastically. Also, lenders might deny your credit application if they come across a rejection from another one during an enquiry. Financial institutions add a note in your CIR when they reject your application. Hence, one credit refusal can lead to the same when you opt for new credit.

The ideal CIBIL score for a personal loan is 750. Lenders may also offer several benefits when you have a high credit score. Hence, increase your score strategically and avail a personal loan without any difficulty.

Bajaj Finserv comes with their exclusive pre-approved offers that reduce the time taken by making the procedure simple. Pre-approved offers are available with unsecured loans (personal loans and business loans), secured loans (home loans), and a list of other financial products and services. Check your pre-approved offers by providing only your name and phone number.

Read More:

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