CIBIL, a part of TransUnion, is one of the RBI-approved credit rating agencies that are responsible for generating credit scores of individuals and businesses based on the data provided by the banks and lending institutions. CIBIL full form is Credit Information Bureau India Limited.
A CIBIL score determines whether an individual is likely to repay his debt or loan in time. Therefore, lenders consider it for deciding the interest rate and tenor at which a loan has to be given. Sometimes, a bad credit score can even get your loan application rejected.
A good credit score should be above 750 as it would help you procure loans from most lenders. However, if your score is below 700 then you must analyze the factors that are affecting your CIBIL score and work on them. Here are the top factors that usually affect your credit score:
Length of credit history
- If you have held a credit account for a long time then it will reflect positively in your credit scores. Therefore, if you have an old credit card, you must never give it up.
- Also, when you seek a loan, you must usually go for long-term loans as they help to maintain and improve your credit score.
Credit utilization & Reports
- Utilizing over 30% of the credit limit that is allotted to you will reduce your credit score. Minimize your credit utilization to increase your credit score.
- You will get a free CIBIL score and report online from the credit bureau websites like Experian, CIBIL, etc. Go through the report carefully and lodge correction requests or complaints if you find any mistakes in them.
- You need to pay your pending dues, loan EMIs, etc. on time as a single missed payment will affect your credit score.
- If you find it difficult to remember your due dates, you can set reminders on your mobile phones to clear your outstanding well before the due date.
- It is also recommended that you apply for a loan only when it is seriously needed as rejected loan applications and hard enquiries will also contribute towards deteriorating your CIBIL score.