Essential Steps and Tips to Check Your CIBIL Score

The credit score is an electronic representation of a borrower’s creditworthiness and repayment capacity. Lenders check a borrower’s credit score to assess their ability to repay their loan EMIs as well as the risk involved for the lender in lending money to the borrower. The question is how does the knowledge of one’s credit score help a lender gauge the risk involved for them in entering into any kind of business with the credit user? 

All lenders partner with credit information agencies to get a better idea of how reliable a credit user is. What do credit information agencies do? These agencies collect information about millions of credit users across the world from banks, lenders and financial institutions. Credit information agencies look for answers to questions such as how clean is the borrower’s repayment history? How many EMIs and credit card bills have they missed in the past?

What is their credit utilisation ratio and how dependent are they on credit? What kind of credit mix are they handling? Answers to these questions helps credit rating agencies understand how a particular borrower used credit and how likely are they to default on loan repayment. Based on answers to these questions, credit information agencies assign credit scores to borrowers. The credit score varies between 300 and 900 and indicates a borrower’s repayment capacity and creditworthiness.

A credit score between 750 and 900 is considered excellent. It is indicative of a borrower who has a clean repayment history, is not excessively dependent on credit and can be fully trusted with timely repayment of loan money. A credit score between 700 and 750 is considered good. A borrower with such a credit score is not the ideal borrower but more or less can be trusted with timely repayment of loan money.

A credit score in the range 650 and 700 is considered decent and ensures loan approval but not on beneficial loan terms and conditions. A cibil score in the range 600 and 650 is considered average and availing of a loan with such a credit score is difficult. A credit score below 600 is considered bad and getting approved for a home loan with such a credit score is nearly impossible.

If you are applying for a home loan, your credit score must at least be 750. The question is how does one check their credit score?

How to Check Credit Score? 

If you are applying for a home loan, your focus should be on trying your best to avail yourself of a low home loan interest rate. Availability of such a credit score will be possible only if you have an excellent credit score. A credit score check is therefore recommended before you apply for a home loan. The question is how to check cibil score

There are two ways in which a borrower can check their credit score. 

  1. There are many websites that allow borrowers to check their credit score for free. All one must do is share some basic details about themselves, such as their name, email address, phone number, etc. These details allow these website owners to match the applicant with the right credit profile. The information shared here remains safe with website owners and one need not worry about any kind of security breach. However, when one uses this method of checking one’s credit score, they get to know only the credit score. These websites do not share their credit reports with borrowers. 
  1. If your credit score is below 750, you will have to figure out what has caused your credit score to go down. For this, you will need to access your credit report. If you want your credit report, you will have to connect with one of the four credit information agencies that the RBI recognizes — Experian, Equifax, CRIF Highmark and TransUnion CIBIL.  These agencies will send you your credit report. However, you will be required to pay a small fee to access this service.

What Should You Do If Your Credit Score is Not 750? 

If your credit score is below 750, it is best that you work on improving your credit score first and then apply for a loan. Here are a few tips to help you improve your credit score. 

– Start paying all your EMIs and credit card bills on time. If you tend to forget due dates, set up auto-payments. 

– Maintain a low credit utilisation ratio. Your credit score should not exceed 30%.

 – Maintain a healthy mix of both secured and unsecured loans. If you have unsecured loans in your kitty, add a secured one and vice versa. This will convince your lender of your ability to handle all kinds of debt and improve your credit score

– If your credit score is already low, do not apply for new loans and credit cards. New loan applications will lead to new hard enquiries, which in turn, will cause your credit score to go down. 

– Check your credit score for errors. Sometimes, factual errors and misinformation causes a person’s credit score to go down. Check your credit report for such errors and if you see any, report them immediately.

A home loan is a long-term commitment and thus, one must try their best to avail of the lowest interest rate possible. If your credit score is below 750, no lender will offer you a good home loan deal. Improving your credit score may take time but it will definitely prove to be helpful in the long run. 

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