Whether it is a business loan, home loan, car loan, or any loan, getting it is decided on the basis of the CIBIL score of the person applying for the loan. Having a good credit score is very important for all types of loans.
The lending bank or non-banking financial company (NBFC) company, while giving the loan, always keeps in mind that the CIBIL score of the loan being given should be in good standing. Checking the CIBIL of lending institutions is an essential parameter.
Let us understand what is the way to correct CIBIL score and how to improve CIBIL score that has deteriorated:
A credit score is a three-digit number. It is a number between 300 and 900. The original name of CIBIL Score is Credit Score. A company called CIBIL does credit score making, hence the credit score was named CIBIL Score.
The full name of CIBIL company is Credit Information Bureau (India) Limited. This company monitors the loan transactions from the bank account of the people and the methods of repayment of the loan and prepares its report.
CIBIL Company mainly works as an agency. Whenever a person applies for a loan from a bank or NBFC company, the lending company checks the credit score of that person by purchasing it from the CIBIL company. Let us tell you that if you want, you can check your CIBIL score yourself.
Helps in getting a quick business loan
Whenever a person applies for a loan, then the company or bank from which he applies for the loan, then the lenders first check the credit score of the person applying. The loan file proceeds only if the credit score is more than 700. not otherwise.
In such a situation, for people whose credit score is more than 700, after applying for the loan, it does not take much time to get the loan. The loan gets approved quickly. The lending companies believe that people who have a credit score of more than 700 have higher repayment capacity and they repay the loan amount quickly.
A loan is available at a relatively low-interest rate
Yes. The interest rate of the loan is also lower if you have a better credit score. Loan companies give priority to people with high credit scores. To woo people with a good credit score, loan companies offer loans at low-interest rates.
In the CIBIL Score Calculation, there are many reasons due to which the CIBIL Score gets reduced. Let us have a look at those reasons:
Forgetting the loan EMI payment date
This is one of the main reasons for the low credit score – the EMI of the previous loan is not deposited on the due date. When the loan EMI is not deposited on the due date, then in that condition CIBIL institution assumes that the person concerned is not sincere to repay the loan. That’s why the credit score is given low. For a better credit score, it is important to deposit the loan EMI for a stipulated period.
Applying for more than one loan at a time
Only one loan in the name of any individual at a time is considered better. Having more than one loan is more likely to result in a lower credit score. When a person has to apply for a loan in more than one company at the same time then he is considered hungry for a loan. It is written on the credit report. This is also one of the main reasons for low credit scores.
Make tough inquiries from lending companies
It often happens that those who are in need of a loan start making inquiries from the lending company several times. Or frequently inquire for a loan even if not eligible for a loan or inquire for more amount while being eligible for less amount also lowers the credit score.
Apply for a loan
Always check your CIBIL score before applying for a loan. Before applying for a business loan or any other type of loan, you must check your CIBIL score. Checking your credit score gives you an idea of your current credit score. If it is low then it can be corrected within 2 to 3 months of CIBIL score.
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