Financial planners universally acknowledged that debt is not desirable, but it can be advantageous to understand how to check a CIBIL score. For instance, a mortgage loan is considered a favorable debt as it provides the borrower with a valuable long-term asset that increases their net worth and offers tax savings on the interest paid.
Banks usually have a standard lending rate for different loan categories. Still, the borrower’s profile determines the actual interest rate, with credit score being a crucial factor. Hence, a borrower needs to understand how to check a CIBIL score. A high credit score leads to more favorable loan terms in terms of interest rates and the repayment period.
What is a Credit Bureau?
Credit bureaus or agencies keep track of credit transactions, particularly loans and their payments, for individuals and businesses. They provide credit scores to individuals or businesses based on their history of credit card use, loans, overdraft facilities, and utility bill payments. Banks and other loan providers rely on the reports from these credit rating agencies to make lending decisions.
What is the meaning of a credit score?
An individual’s credit score is the main factor that banks and financial institutions use to determine whether to grant a loan or credit facility. The CIBIL score ranges from 300 to 900. Individuals can obtain a detailed credit report by subscribing to a package from a credit information service such as Bajaj Finserv Credit Pass. CIBIL is one of India’s major credit rating and information companies. It collects and maintains credit information on individuals and businesses, which it then uses to generate credit reports and scores.
Checking CIBIL score online
To check CIBIL score by aadhar card in India, you can visit the official CIBIL website. Alternatively, you can make use of Bajaj Finserv Credit Pass services. Bajaj Finserv is a renowned financial institution in India, known for offering accurate and reliable CIBIL score information to individuals through its Bajaj Finserv Credit Pass services. This is a convenient and efficient method for individuals to stay updated on their credit score and take necessary steps to improve it if required.
Factors that affect your Credit Score
Your credit score is determined by numerous factors that a credit bureau considers when calculating it. These factors reflect your past credit behavior and are reported to banks and non-bank financial institutions whenever you apply for a credit product. Some of the significant elements that impact your credit score include:
- Loan Repayment History
Paying on time can improve your credit score and make a significant difference. Failing to make your EMIs or paying late will harm your CIBIL score.
- Duration of Credit History
The length of your credit history influences your credit score. It indicates responsible credit behavior if you have used credit cards or loans for an extended period and made timely payments.
- Number of Hard Inquiries
Every time you apply for a new credit product or check your credit score by knowing how to check a CIBIL score, the financial institution will request information about your credit score, known as a hard inquiry. Excessive hard inquiries from lenders and financial institutions can hurt your credit score, as it shows a high demand for credit.
- Credit Utilization Ratio
The credit utilization ratio is the proportion of credit you use compared to the amount available. It’s recommended to keep your credit utilization below 30% to maintain a healthy balance. Having a credit utilization ratio between 60-70% may not greatly affect your credit score, but reaching or exceeding your credit limit can suggest a high dependence on credit and repayment burden, which could negatively impact your credit score. So, it is very important to understand how to check a CIBIL score, so that you can keep an eye on the impact of credit utilization ratio on CIBIL score.
A credit score plays a crucial role in the lending decision-making process and is often considered one of the most important factors by lenders. Maintaining a good credit score and understanding how to check a CIBIL score or check CIBIL score by Aadhar card brings several advantages, including higher chances of loan approval, lower interest rates, quicker and easier loan and credit card approvals, access to pre-approved loans, higher credit card limits, and even discounts on processing fees and other charges.