While the recent advancements in finance, banking services, and technology are growing rapidly, borrowing instant loans and instant cash has become more accessible for all in times of need. With minimal paperwork and no need for collateral or a guarantor, a person can avail of an instant personal loan. While this has made loan borrowing easy, there are still eligibility criteria to ensure that the borrower is capable of and willing to pay back the borrowed amount with interest. This is where the CIBIL score or credit score comes in. This score ensures the lender that the money is being lent to a client who has a good historical record of payments and loan borrowing. If you have a low CIBIL score, and you are looking for ways to improve cibil score, this article is the best place for you to start learning all about instant loans, CIBIL scores, and more. We will be discussing how to improve your CIBIL score for easily availing of your loans getting the required amount as per your needs.
Before we dive into the steps of increasing the CIBIL score and improving the credit report, we must know what CIBIL scores are, how they are calculated and what a good score is. To understand why CIBIL scores are lower for some users, we must also know in detail the reasons for a low CIBIL score which will help us avoid those activities and hence improve the CIBIL score for borrowing loans. Increasing CIBIL scores is not a very difficult task, once you have figured out the cause of your poor credit report. By following just a few easy steps, you will be able to improve your credit reports and increase CIBIL scores faster. In this article, we will be looking at what are CIBIL scores and what is a good CIBIL score to be maintained, how to increase CIBIL scores after settlement, and tips to increase CIBIL score faster.
Table Of Contents
In this article, you can read about the following topics in detail:
- What is Loaney?
- What is a CIBIL score?
- How do we calculate CIBIL score?
- How to increase your credit score quickly?
- What is a Good Credit Score?
- The Reason Behind Low CIBIL Scores
Before concluding this article, we will be looking at a few frequently asked questions on how to improve CIBIL scores immediately and answering them for your convenience.
What Is Loaney?
Are you skeptical about borrowing money and taking out a loan? Surely. Your reason for worry must be the interest rates or collateral or the huge amount of paperwork that might be involved. Well, while it is not wrong to be worried about the same, it is even more important to know of borrowing options like an instant personal loan. This type of loan can be a solution to your financial problems in times of an emergency and also solve your worries about repayment and submitting collateral.
A personal loan or an instant loan is an unsecured debt. This means that you can borrow the required amount without submitting collateral. The interest rates of this type of loan are lower and the loan can be repaid over a shorter repayment tenure. You can easily apply for this type of loan online, on platforms like Loaney.
Financial services like these online, have made them popular even among the youth and made them familiar with handling finances. You can easily avail yourself of a wide range of facilities online. All you need to know is the documents you will need for the service you are availing of and you can get your work done within minutes.
Loaney is a digital space that offers small loans to its clients for low-interest rates and shorter repayment tenures. You will not need to submit much paperwork, present a guarantor or even specify your reason for borrowing a loan. Loaney offers personal loans to its clients without submitting collateral. You can avail of a loan of up to Rs. 15,000 from the comfort of your homes within a few clicks. Loaney does not require you to submit your credit report or CIBIL score and is a good option for a person with a low CIBIL score who urgently needs to borrow the funds.
What Is A CIBIL Score?
Your previous credit-related activities and loans borrowed and repaid play a major role in determining your eligibility for the next loan you are about to apply for. This record of your past activities is represented by a special 3 digit number. This number is called the CIBIL score or the credit score. In this section, we will be taking a look at what CIBIL is, what it does, and what exactly the CIBIL score or the credit score is.
In the past, CIBIL was known as the Credit Information Bureau India Limited. Currently named the TransUnion CIBIL Limited is a credit rating agency. This agency maintains a history and track record of the activities related to credits and credit cards of individuals and companies. Loans borrowed by the companies or persons, credits cards, and other credit-related activities are a part of this information.
According to the official website of TransUnion CIBIL Limited, “The bureau provides information and tools for gaining a clear understanding of their credit history and financial reputation, and guarding against the theft of personal information and potential fraud.”
As you might have seen in the eligibility criteria for borrowing a loan, the CIBIL score is one of the most important points that is considered by the lender. No matter which type of loan you are looking forward to borrowing, a CIBIL score is important for all of them. The CIBIL score is used by your lender to assess your records of borrowing and payments to ensure that you are capable pay back the borrowed amount with interest and will do so in the stipulated time frame.
A CIBIL score as mentioned above is a three-digit number. This number is calculated by TransUnion CIBIL Limited for every individual and company who has any credit-related activities or loans borrowed. This number summarises your credit-related activities, credit cards, and loans that you have borrowed previously. The CIBIL score reflects your credit record for any lender to be sure of your worthiness to borrow a loan.
How Do We Calculate CIBIL scores?
A three-digit number that is your CIBIL score ranges between 300 to 900. The CIBIL score is calculated by TransUnion CIBIL Limited and updated regularly with every activity. The CIBIL score is calculated by the credit rating agency taking into consideration a variety of factors. Each of the factors constitutes a specific percentage of the score. The factors that are considered by TransUnion CIBIL Limited while calculating the CIBIL scores are:
- Payment records of the applicant: Your record of payments of bills, repayments of loans, and debts constitutes 30% of your credit score. You must make timely payments to ensure a good CIBIL score.
- Credit Exposure: Credit Exposure which is also called as Credit Utilization ratio constitutes 25% of your CIBIL score. As per the guidelines, for a good CIBIL score you must not utilize more than 30% of your credit limits.
- Type of credit taken and the duration: This factor contributes to 25% of your score. The credit history is important for the lender to know since when you have been handling loans and the type of loan is also considered. Therefore, you must maintain a proper balance between secured and unsecured debts while borrowing.
- The number of Unsuccessful Enquiries: Every time you apply for a loan or credit, an inquiry is made by the lender regarding your credit score. This also impacts the CIBIL score and constitutes 20% of it. The unsuccessful or hard inquiries impact the CIBIL score negatively.
Now that we know how the CIBIL scores are calculated and the factors that determine the CIBIL score, let us move ahead and identify how to improve the CIBIL score and what a good CIBIL score is.
How To In Cibil Score Quickly?
In this section, we will be taking a look at how to improve the CIBIL score fast and be eligible to avail of a loan as per the requirements.
To improve CIBIL score immediately, you can follow the steps given steps:
- Pay all your bills on time and do not cause even a slight delay in doing the same.
- Repay all your debts and borrowed funds within the stipulated period.
- Maintain all your paid-off credit accounts to help strengthen the credit history. Do not close paid-off accounts.
- Do not borrow many loans at the same time or during a short period.
- Get your Credit reports and identify all the negative accounts. Post this you must pay the balances at the earliest.
- Pay your debts and balances instead of transferring them.
- Eliminate the negative accounts immediately.
These 7 steps answer your question of how to improve the CIBIL score and also make it easier for you to understand how you can meet the eligibility criteria for applying for a loan.
What Is A Good Credit Score?
Now that we know and understand what CIBIL scores are, how they are calculated, and also the tips on how to improve CIBIL’s scores, let us take a look at what a good CIBIL credit score is. You must maintain this score to be eligible to borrow a loan or credit.
As mentioned before, the three-digit CIBIL score varies from 300 to 900. On this scale, anything above 750 is considered a good CIBIL score. Most lenders and loan providers need the applicant to have a CIBIL score of at least 750 to qualify for the loan approval. Scores below 750 are considered bad by the money lenders.
The Reasons Behind Low CIBIL Scores
Before we conclude this article, let us briefly take a look at the reasons and causes of a low CIBIL score this will also help us determine better how to improve CIBIL score and increase the chances of getting a loan approved. The following can be listed as the common reasons for a low CIBIL score:
- Poor payment record in the past is one of the major reasons for a low CIBIL score. Delayed payments, missed deadlines and credit balances are some of the poor payment activities that reflect in the credit history.
- High credit utilization is another factor that negatively impacts the credit report and CIBIL score. Credit utilization above 30% leads to a decline in the credit score.
- Incorrect balance of secured and unsecured debts.
- Applying for multiple loans within a short duration of time.
- No credit history is also responsible for a poor CIBIL score.
1. Can my CIBIL score be improved?
Yes, the CIBIL score can be improved by repaying all the debts and paying all the debts in time.
2. How Long does it Take to Recover Credit score after Loan Settlement?
Recovering your credit score after a loan settlement can take up to 6 months.