Personal loans are incredibly helpful when you need a huge sum in a short period of time. Thanks to the increasing demand for the same, banks too these days are coming up with a variety of attractive offers, low interest based schemes, and additional perks to allow more and more people to get a personal loan. However, one thing they almost no bank is ready to compromise with today, is CIBIL score. No matter how good your relations are with your lending institution, how high is the value of your assets, and what your background is, if you are looking for a personal loan with low CIBIL score, then you are in for a big trouble.
It is unfortunate how many people are completely unaware of the importance of CIBIL score or credit score in their lives. In most cases a loan applicant learns about their credit history and score, only when they apply for a loan and their application gets rejected. Bad credit score is the biggest obstacles that you usually have to face when you want a personal loan. However, the good news is that you can improve credit score, but it's at the cost of labour and time.
What Should I do to Improve CIBIL score?
The first thing you need to do, is to understand your current position. To do that you have to get a copy of your CIBIL report, which can be easily download from CIBIL's official website. You can also get your free credit score from www.freescoreindia.com. All you have to do is fill-out an online form, and submit a few documents. Once it is done you can get your report by paying a small fee.
A CIBIL score(which varies between 300 and 900) can be divided in three categories:
· Excellent: A score is considered average it is falls within the range of 700-900. If yours is within this range, then you needn't worry much, for you can easily get a loan of your choice. In fact, with a score good like this you can even bargain for an attractive interest rate from your financial institution.
· Average: A score is considered average if it falls within the range of 500-700. Most people have a score within the same range. If yours is an average score, then your chances of loan approval are also, well- average. You may have to apply for a loan at several banks, and other financial institutions, before finally getting an approval.
· Poor: Any score below 500 is considered poor. If yours belongs to the same category, then it means you are in big trouble. Getting a loan is almost impossible for you, unless you make improvements first.
If you are having a hard time getting a personal loan approved, then here are a few things you can do to improve CIBIL score, and hence improve the likeliness of approval -
· Inculcating Good Payment Habits: The first step towards credit score improvement is instilling good repayment habits. Whatever loans, and/or credit cards you have, be sure to start making their payments on time. Timely payments are essential for score improvement, and every single payment counts. So, arrange your expenses accordingly, so that you won't have to miss a single payment again.
· Report Analysis: It is worth checking your own report for errors/discrepancies. Sometimes your credit score can take a beating just because of a small mistake. For instance, you might be paying your instalments for a particular loan on time, but if your bank provides incorrect information to CIBIL, even if accidently, then they may be led to believe you are not a responsible credit user, and deduct your score. If you find a mistake or error in your report you can have it corrected by informing your financial institution of the same.
· Credit Hungry Behaviour: Do you have several existing loans and credit cards? Do you like to apply for loans frequently? If your answer to any of these questions is "yes", then maybe it is the reason behind your poor credit score. CIBIL deems such kind of behaviour as "credit hungry", and it reflects poorly on you. To fix it, you must become picky with your loans, and only use credit when absolutely necessary.
Credit improvement is often an uphill battle, but if you are persistent and willing to change your actions, then building a impressive score is possible. Of course, if you want to facilitate the process, and need guidance for the same, you can also consult a professional, such as CreditSudhaar, which has a number of credit management experts.