The CIBIL score determines your eligibility for loans and credit cards. While a high CIBIL score grants easier access to credit, a low CIBIL score can make it harder to get credit when you need it.
What Does a Good CIBIL Score Look Like?
A CIBIL score between 700 and 900 is considered good. Many advantages come with a high CIBIL score, including faster approval, a low-interest rate on the credit facility, a larger loan amount as well as a longer repayment time. Furthermore, numerous lenders will be willing to approve your loan, allowing you to select from multiple lenders.
What is a Good Score Specifically For Loans?
A good CIBIL score for loans is the same as a good CIBIL score for any other purpose, which is a score between 700 and 900. Your loan application will have a better chance of being approved if you have a strong credit score. A credit score of 700 or higher is favourable for any type of loan, including personal loans, automobile loans, and home loans. With a strong CIBIL score, you can receive a decent offer with a reduced interest rate, longer repayment duration, larger loan amount, and more.
Factors That Influence Your CIBIL Score:
- Delay In Payments:
A single late payment or payments made after the due date might have a negative influence on your credit score. You may choose to ignore the payment date and use the funds for other urgent needs. However, failing to make payments on time can make you appear careless with money, lowering your credit score.
- High Credit Limit Utilization:
Lenders determine a credit limit for each customer based on their income and debt-service ratio. The credit limit specifies how much money customers can spend on repayments considering their other obligations. Your credit score may be jeopardised if you use more than 50% of your credit limit on a frequent basis. It demonstrates that you are inept at budgeting and spending. To maintain a decent credit score, make sure that your expenses do not exceed 50% of your credit limit.
- Multiple Credit Requests:
Individuals often end up applying for credit from multiple sources when faced with a financial crunch. Although the situation of the customer is understandable, it is best to avoid applying for credit from multiple lenders out of desperation. This displays your financial vulnerability and repayment of your loan does not look promising to the lenders. This reduces your credit score.
In this article, we have discussed the significance of a good CIBIL score and the multiple factors that influence it. One must keep their credit scores in mind before applying for loans and follow the aforementioned points. For more information about what creates a good CIBIL score for loans, contact our experts.