A CIBIL score is a three-digit number that reflects a person’s creditworthiness. It ranges from 300 to 900. A score of 750 and above is considered to be a good CIBIL score. Your credit score should be 750-900 to be eligible for most credit products. When you have a good credit score, you are more likely to qualify for a loan quickly and at a low-interest rate.
It is very important to know what is a good CIBIL Score as it will ensure that you have a higher chance of getting your loan application approved. A score of more than 750 is considered favorable regardless of the type of loan you seek, whether a personal loan, car loan or mortgage loan.
Factors Affecting your CIBIL Score
The credit score can be negatively impacted by just one delayed payment of a credit card or payments made after the due date. When you do not pay your credit card bill, you tend to ignore the payment and instead use the money for other emergency purposes. This delay in payments may indicate irresponsible behaviour when handling finances, leading to a lower credit score because you will appear irresponsible when dealing with finances.
High Utilisation of Credit Limit
After considering the income and debt-service ratio, lenders set a credit limit for each person. Your credit score can suffer if you regularly use over 50% of your credit limit, putting your credit score at risk. To keep a good credit score, you must ensure that your expenses remain less than 50% of your credit limit.
Multiple Credit Applications
When you are in a financial emergency and are seeking a loan from multiple lenders within a short time, you may need cash immediately and have applied for a loan from multiple lenders. Whenever each of these lenders sends an enquiry request to a credit rating agency, these enquiries will be recorded in your credit report, resulting in a decrease in your credit rating.