HOW TO BUILD HIGH CIBIL SCORE
Credit score, also at times referred to as CIBIL score, is a numerical value that is used to calculate the borrower’s creditworthiness. As you might be aware, the credit score is a three-digit number, usually within the range of 300-900— A higher score translates into the better chances of securing an SME loan and that too with an attractive interest rate. However, over a period of time, it tends to build up.
On the subject of creditworthiness, one may argue, “Aren’t my earning details proof enough?” However, they can’t let a lending institution get an insight into your financial history. A loan lender would like to test not only your ability to repay the Working Capital loan but also your intention to do so, to be on the safe side.
The lender gets a complete overview of the risk involved in the provision of a loan with a Credit Score. It has a significant impact on an individual’s financial statistics — the CIBIL, CRIF High Mark, Experian are few of the famous and commonly used credit testing bureaus in India.
Steps to achieve high credit scores
A high CIBIL score is critical when an Unsecured Business Loan is planned. A CIBIL score of 750-900 is considered decent, and it can be achieved by applying the following measures.
- Ensure timely payments: Payments made on or before for the credit card and EMI loan dates often leads to higher credit scores. Hence, the timely fulfillment of your financial obligation is the surest means to stay on top of the CIBIL.
- Maintain balance: Try to keep your credit card spending on the lower side if you are eyeing a good CIBIL score— It is best to use up to 30% of the credit. Higher credit utility suggests higher dependence on credit instruments, which could impact your scores adversely.
- Keep your credit obligations minimal: If you have a Business Loan or credit applications running in your name already, the lender is expected to tread with caution— It is an indicator that you are already burdened with financial obligations and another loan would add to the strain.
- Balanced credit mix: Keep a secured and Unsecured Business Loan balance. If you have more unsecured loans, try and compensate by taking secured loans such as car loans or home loans to balance your portfolio and have a decisive influence on your credit score.
- Credit score monitoring: Keeping track of your credit score is a good practice. You may do so if any rectification is necessary. Especially if you have co-signed or kept a joint loan account with someone, then it’s all the more relevant. Any default from a co-applicants side could also affect your credit score.
In short, sustaining healthy credit practices has a positive influence on credit scores, especially in matters relating to financial interests and Loan for Small Business approvals. Keep restraint from substantial lending activities in the future that could snowball into massive debts. It is both critical and imperative to maintain good credit habits, as their ratings are then used for potential allocations of Loan for Retailers.