Sometimes people encounter a weird situation where Despite having a hefty salary, every bank refuses them to give loans. If we go into deep analysis, the answer we get from the banks is that your CIBIL score is not good or it is negative. Every financial institution or bank checks the CIBIL score of each and every customer before issuing the credit card irrespective of his salary and background.
CIBIL Score is also important for the loan purpose and if you are planning to take any type of loan, you must have a good credit history. Every bank will check your credit history at the time you apply for a loan. The financial institution will check every related detail for the loan like whether you took any loan in past or not and if yes, whether you paid it timely or not. And if the bank got to know about any mistake committed by you while paying your previous loan, you may be rejected for the current loan.
You must be thinking about how come the bank came to know about your past loan history and other pieces of information related to that? It has a very simple answer that in the present world of digitisation, all the financial transactions done by you are being monitored and you can ask for any details at any point. All banks keep the records and are interconnected by the same means to check the details of any customer. So, while applying for a loan by you, the bank will immediately come to know about your track record in terms of financial management and behaviour.
What is the CIBIL score
Credit or CIBIL score is nothing but a three-digit number and the number may be ranged between 300 to 900 depending on your financial stability and behaviour. The CIBIL score with the highest value is considered best i.e more the score reflects your efficiency in handling personal finances. Banks will decide whether to process your loan or not based on this value only. Nearly 80% of loans are processed for those customers who have a credit score of more than 750.
Reasons for bad CIBIL score
The main reason for the poor CIBIL score of any customer is the late payment of the loans taken by them in past. Payment of Loan may be of any kind like payment of EMI of the loan or the late payment of credit card bills. This type of behaviours seriously affects the CIBIL Score and take your score to a negative value. Sometimes, frequent queries with the banks about loans can cause a negative impact on your credit score. So, you should avoid doing this and try to improve the score by paying the current loan in time. If you have a good score and are eligible for the loan, you will get a call from the bank itself.
How to improve CIBIL score
Now as you must have understood the importance of the civil score to our personal finances, we must try to keep this score well above a limit which is 750+. There are ways and means to achieve this, but all are concentrated on one guideline only and that is to Pay the bills and instalments on time. We must have stability in our finances and must maintain balance with every debt we have.
How and check CIBIL score
Now as you are well versed with the utility of the CIBIL score, you must be searching for your score. Nowadays, it is very easy to find the CIBIL score and you don’t have to go anywhere but just have to search some websites and you are done. You have to search for the Official website of CIBIL score and enter your details like PAN number and others. Once verified by the OTP to your registered contact number, you will have access to your CIBIL score.
Importance of CIBIL score
As already discussed, that banks will check the credit score for each customer prior to processing any loan application by them. And you also know that there is a minimum range of 750 for your score to be considered a good score. If you have a credit or CIBIL score between 300 to 550, it is taken as a Poor Score and you will be straightway denied any loan by the banks.
A credit score between 550 to 750 is considered as an Average score and you have some chances to get the loan approved by the banks but the interest rate charged by the bank may be high. But having a CIBIL score of more than 750 is defined as the ideal range and you will get instant loan approval. The same credit score ranges apply for your application of Plastic money like Credit Cards.