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How to maintain good CIBIL?

CIBIL which stands for Credit Information Bureau (India) Limited is India’s first Credit Information Company (CIC). This is the only institution in India that is authorized to collect and maintain records of individuals with respect to their credit card payments and loans. Before a person applies for a loan or credit card from a bank it is recommended that they have a fair idea of their CIBIL record and also they understand the intricacies involved in maintaining a high score. This will give them more scope to strike a good deal with the financial institution from where they are planning to obtain either a credit card with high limit or increase their eligibility in any form of loans (home, personal and vehicle). Also it will make it easy for the credit grantors to analyse and come to a reasonable conclusion on how much a person is worth especially when it comes to lending them an unsecured loan (credit card or personal loan) as these two do not have a collateral and involve a high risk for the lending institutions.

There are two significant points that person should keep in mind before jumping into the process of applying a loan or credit card.

How to improve the current Credit Information Report (CIR) and CIBIL TransUnion Score?

  • This is just a matter of building a robust personal financial discipline like making payments on or before the due date, maintaining the credit limit unless it is really necessary like medical emergencies so that your credit limit utilization is less than 50% of the limit, cutting down your shopaholic tendencies, monitoring the spending trend of your co-signed etc.

What are the factors that have negative impact on these scores?

Make sure that your payment history does not have the following – any bounced cheque or late payments for a continuous period, maxing your credit card which means utilizing the card to its full limit, multiple loans running in parallel, having a score of ‘NH’ or ‘NA’ (no credit history) etc.

Considering these aspects, it is imperative that each one of us take complete responsibility when it comes to using these financial tools as they are meant to enhance our lives not cripple them. So think twice before your swipe that card or splashing that personal loan on your dream vacation. The intention here is not to dissuade you from using these products but to bring in more clarity in the way these eco-systems function. Strong CIBIL score means very fast processing of your application and dispensation of the money. A score of 750 is perceived by a financial institution as responsible borrower. The cost of obtaining these figures is just INR 470 and the benefit that a person gets by tracking these figures is immense. So please go ahead and get your score and ensure that they are in the range of 300 to 900.

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