A good credit rating is a key to an easy and quick loan. The first thing a lender will consider is your credit score when applying for the loan. If you have a good credit score (a CIBIL Transunion score higher than 750 is considered good), your loan request will be processed. However, if your credit score is in the lower range, your loan application will be completely rejected.
Therefore, it is very important to have a good credit rating. And keep in mind that you cannot get good credit overnight because it is calculated based on your credit rating.
To get a good credit score, you need to know the factors that affect your credit score.
Here are some factors that affect your credit rating.
Your payment history is the most important factor that affects your CIBIL score. It is likely that a credit loss and a credit card bill will have a negative impact on your score. However, if you paid all of the monthly installments (EMI) and relevant credit card bills on time, you will be rewarded with better credit.
Whenever you apply for a new loan, e.g. For example, a credit card, a loan, etc., the bank or the lender will query your CIBIL report to check your credit history and score. Too many of these consultations will have a negative impact on your creditworthiness, as this can affect you as a loan-hungry person. You are considered credit avid if you apply for credit with several financial institutions at the same time. The multiple uses of loans indicate that the burden of your loan will increase in the future and if you have difficulties in honoring your future debts.
The duration of the loan also affects your CIBIL score. If you pay off long-term debt responsibly by paying the loan amount on time, it will have a positive impact on your creditworthiness.
Another factor that negatively affects your CIBIL values is a high percentage of unsecured loans, such as personal loans and credit card spending. For many banks, this is a sign of poor management of their personal finances and they are wary of granting credit to these people. However, if you have more secured loans, your credit rating will likely increase.
It is necessary to review the credit report every six months to correct any errors if any. Delayed reports or incorrect bank reports may reflect incorrect information in your credit report and reduce your CIBIL score.
Frequent requests for a higher credit limit can also have a negative impact on your creditworthiness. In this context, the bank requests CIBIL its reports. And this difficult investigation can reach its CIBIL value. Therefore, only ask for an upper limit if you really need it.
If you act as a guarantor for a person’s loan, your creditworthiness will not be affected. However, if the person to whom you gave the guarantee is in default or delays the payment, your creditworthiness will be affected.