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* Thread on #CIBIL SCORE *
Since the thread on #CreditCards ,
(Link here for reference , )
Many DM'ed me asking about CIBIL score , so decided to write a small thread on it .
Disclaimer : This is MY opinion based on MY limited knowledge :)
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A CIBIL score is a consumer's credit score generated by a credit bureau on the basis of their algorithm. It basically evaluates the credit history based on reflection of repayment and credit profile & thereby determines the eligibility for a loan.
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So a good credit score (above 700 generally ) can help us get a loan easily at a relatively better rate of interest.
How? 🤔
It indicates you PLAN well for your financial needs & pay your debts on TIME. Basically " GOOD CREDIT WORTHINESS " .
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#InvestmentPointers
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Multiple factors in play here :
* Repayment history - Timely repayments give high credit score
* Type of loan availed - Multiple loans (secured/unsecured) is a big NO. Many loans availed in a short timeframe indicate a heavy repayment burden.(Credit utilisation ratio)
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* Outstanding balances , write off's & frequency - Whether we close the loan on time & if not the extent and time of default.
Any default or write off automatically lowers the score .
Using a credit card to pay another card due is also carefully scrutinized.
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#finance
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I went and googled right away, but I have no Credit score ! 🙄🤷
This happens when one has not taken any loans or credit cards from any bank . Thus one doesn't have any credit history in order to build a credit score .
So the next step automatically is to build one.
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Few pointers:
18-36 months of credit usage is required for a good score.
Using savings account one can apply for a secured loan (aka a credit card) in the same bank.
* A credit card is issued against an FD as well . Different FD amt for different banks applicable.
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#CIBILScore ranges from 300-900 & is calculated based on past history & credit worthiness.
A CIBIL score from 750 to 900 is the best possible range option and banks & FI shall consider you to be a low risk borrower .
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Work towards a positive Credit Profile :
* ALWAYS pay dues on time.
* Prudent usage of card helps.
* If one has co-signed or signed up as a guarantee or in case of joint accounts ,be careful as you will also be held responsible.
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* Don't keep applying for a credit card repeatedly or increasing limit on the existing card.
* Review CIBIL score prior to loan application to ensure it is good .
Good to be prepared always ! Be loan - ready as we never know when we might need one !
* The End *
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