People often decide on personal loans for sufficing their diverse financial needs. However, lenders tend to assess a borrower’s creditworthiness by their CIBIL score before sanctioning a loan.
Lenders combine the credit score along with the information given in credit report to weigh the risk or even the financial situation of the borrower. Bad credit history slims down chances of approval. So, it is essential to have a good CIBIL score to gain final approval from the lender.
What is a good CIBIL score?
The very top tier usually states around 750 and more. Lenders typically don’t prefer the score below this mark. However, reaching up to the highest mark takes time and well-planned financial management. Here are 4 valuable tips for building the highest credit score:
- Keep an eye on CIBIL/credit report
It is essential to check CIBIL/credit report at a particular interval to assess the financial standing. Make sure credit report is free from errors because incorrect information shows direct downside in the CIBIL score.
Contact your lender if you notice any inaccuracy and dispute it at the earliest. Once the error is fixed, it will show improvement in your score.
- Maintain a credit utilisation ratio
Credit utilisation ratio defines the ratio of availed credit to the given credit limit. The maximum advisable credit utilisation ratio is 30% or below that.
Avoid using a credit card for everything and definitely overspending. By doing so, there will be a positive impact on the CIBIL report.
- Pay all credit outstanding on time
To have a perfect credit score, make timely payments a habit. Financial institutions emphasise greatly on a borrower’s repayment capability while approving the personal loan. Missing a single payment or EMI can have an adverse impact on the credit history. So, dodge defaults and practice timely payments of dues to boost your creditworthiness.
- Keep the old credit card running
Timely credit card repayments have a positive impact on your CIBIL score. When you avail a new credit card, avoid closing the previous ones. Closing or even opening a new credit card account negatively affects the credit score.
Your credit score with will decrease if you close your credit card even if you do not have an outstanding bill. Remember, credit score changes every month; therefore follow these tips to maximise the benefits from lending institutions.
Lenders keep room for negotiating interest rates on personal loan when a borrower possesses the perfect credit score. So, availing a personal loan to navigate through various unexpected or unplanned expenses is no more a tedious task.
However, one has to qualify specific personal loan eligibility criteria to avail the loan amount. An applicant needs to be between 23 and 58 years of age at the time of application. He also must do a job from any MNC or public/private company.
How to apply for this loan?
To apply, a loan seeker needs to furnish KYC documents, employee ID card, salary slips of the last two months and also salary account statements for the previous three months. He can get the loan amount disbursed within 24 hours once these documents are verified online.
So, the bottom line is, maintain a healthy credit score and enjoy a hassle-free loan application process seating right from the comfort of your house or office.