Everyone needs financial assistance at some point in their life, and this help can be obtained from the bank provided you fit in their criteria.
You all are familiar with terms like credit scores, CIBIL scores, etc., but do you know what a credit score is, the factors that affect it, and how it can be improved? Let’s take a look at the above:

What is a credit score?

A credit score is nothing but a three-digit number that indicates your creditworthiness and tells lenders about your ability to repay loans. The number generated as your credit score will be based on data collected from different credit institutions and merged into the credit information report. This is to better assess your credit behaviour and can be calculated by now just your credit history, but also by how you use your credit cards. The most popular credit score (also known as credit rating) in India is the CIBIL rating.

Importance of having a good credit score

One of the main reasons for loan eligibility is having a good credit score. When you apply for a home loan, the first aspect checked by the credit issuer is your credit utilisation. Your credit scores and reports are proof that you can pay off the debt you take on. In some cases, the lender approves the loan even if you have a low credit score, but this might attract a loan at a higher interest rate than one with a good credit score, resulting in higher monthly EMI. So, maintain a good credit score to help evaluate that you can pay off the loan in a timely manner, increase eligibility for higher loan amounts and longer repayment periods from banks and financial institutions.

What is a good CIBIL score?

The factorization of the CIBIL score is done on the following basis:

A higher CIBIL score helps to make the loan process much easier. As a general rule, having a CIBIL score above 750 makes it easier for you to get your home loan approved with a higher principal amount.

Below are a few ways in which you can improve your credit score:

1. Pay loan EMIs on time and never miss an installment.
2. Always maintain a balance between your income and debt.
3. Take credit only when it is necessary.
4. Minimize the number of loans you take.
5. Always keep an eye on secured and unsecured loans.
6. Never max out the credit card limit, as it implies a negative impact on the credit issuer.
7. Aim for maximum utilization of the credit limit.
8. Review your credit reports frequently to get an idea of your spending patterns.
9. Use credit monitoring to track credit usage.

Bottom Line

Having a great CIBIl score pays off well in the long run. Your goal must be to improve your credit score, especially when you are applying for a loan to make a substantial purchase, like a new home, expansion of business, or a personal commitment.

There are so many different financial options available, such as a Loan Against Property, where you can mortgage your property to take personal, business, or home loans. Read our previous blog to know more about LAP and its advantages.
Contact ESTATEMINT to get expert advice to find your dream home in Mumbai and Pune.