Improve your CIBIL score for hassle-free home loan

NEW DELHI: Ritu Chopra and Mona Singh, two best friends, decided to take

home loan

and applied separately in the same bank. The bank approved Ritu’s application while rejected Mona’s request. What makes any bank consider the loan application of some people while reject others?

Loans

are given only when you have a good

credit score

. Therefore, it is important to know your

CIBIL score

and improve it, for increasing your chances of getting hassle-free loans.


CIBIL score is prepared on the basis of your

credit history

and the loan applications are evaluated and approved accordingly. It is a 3-digit numeric summary of your credit history and ranges from 300 to 900. The closer your score is to 900, the higher are the chances of your loan application getting approved by banks or other financial institutions. Banks and financial institutions check your CIBIL score to evaluate the loan application as they need to know if you are a reliable applicant.

Let us find out how to improve your CIBIL score.

CREDIT HISTORY

If you are looking to improve your CIBIL score then try to maintain a good credit history, which is essential for any loan approval.

PAY ON TIME

Late payments have a negative impact on your credit history therefore, you need to ensure that all your credit card or EMIs or bills are paid timely. It is very important to always pay your dues on time.

BALANCE CREDIT

You need to ensure that you keep your balances low. It is a good idea to not use too much credit as it shows your dependency on credit that is seen negatively and impacts your credit history.

MIX OF CREDIT

Do not avail too many unsecured loans and maintain a healthy credit mix. It is a good idea to have a mix of secured (home loan, auto loan) and unsecured (personal loan, credit cards) loans.

NEW CREDIT

In case your old credit shows excessive credit dependency then you can apply for new credit. It will divide the credit into two products and won’t impact your score.

JOINT BORROWING

If you are a co-applicant in a home loan then ensure you keep a track of the joint accounts. You are liable for all jointly held accounts and your scores get impacted due to default in payments. Therefore, your joint holder’s (or the guaranteed individual) negligence could affect your score.

CHECK SCORE

Keep checking your credit history frequently throughout the year. Monitor your CIBIL score and highlight discrepancies, if any, in your credit history to avoid rejection by lenders. If you notice that your account continues to show an already paid loan or any dues that you have cleared then bring it to the notice of CIBIL through a resolution form.

HIGH SCORE

Remember that a high score is beneficial if you are planning to borrow in future for your house or any other financial need. The rate of interest offered by the bank is lower for those having a high CIBIL score.

Various factors are taken into consideration while a loan is disbursed but CIBIL score is the first impression. Lower score means that the applicant has a low creditworthiness and banks will not give loans to such applicants.