Achieving the Ideal CIBIL Score for Your Property Loan - Loan Trivia


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Friday 15 March 2024

Achieving the Ideal CIBIL Score for Your Property Loan

TransUnion CIBIL Limited is a credit information agency that has been operational in India since 2000. It maintains records of over 600 million credit users and 32 million businesses and is one of the most trusted names in the Indian lending market. Most lenders rely on TransUnion CIBIL to help them assess the repayment capacity of a credit user as well as gauge the risk involved in doing business with a specific credit user. TransUnion CIBIL helps lenders do so through the credit rating it assigns credit users. This credit rating is called the CIBIL score and it can range from 300 to 900. 900 is the highest credit score an individual can have. To be eligible for any kind of loan on favourable loan terms and conditions, an individual must have a CIBIL score above 750. 

Here are a few tips on how you can achieve the ideal CIBIL score for your property loan. 

1. To build a strong credit history, the first thing you must do is build a strong payment track record. This means you must build a clean repayment history with no instances of missed EMIs or loan defaults. One of the easiest ways to maintain a clean repayment history is to set aside an emergency fund the moment you apply for and get approved for a property loan. This emergency fund will help you pay loan EMIs in case of a financial emergency and also save you from having a bad credit score and low access to credit. 

2. Credit users must also make it a point to maintain their credit utilization ratio below 30%. A high credit utilization ratio indicates a high dependency on credit and therefore, leads to a low credit score. One of the easiest ways to maintain good cibil score is to clear the entire amount due on your credit card each month and if you do not plan on clearing the entire amount due, it is best to not use your credit card for the concerned expense. 

3. All credit users must also maintain a healthy mix of both secured and unsecured loans. Doing so is important as it convinces lenders of a person's ability to handle all kinds of debt. 

4. Credit users must never apply for too many loans and credit cards at the same time. Doing so portrays a credit user to be credit-hungry by causing them to have too many hard enquiries under their name. Thus, credit users must spread out their loan applications and never apply for credit from too many different sources at the same time. 

5. Sometimes, an individual's credit rating goes down due to no fault of their own. This happens when errors creep into an individual's credit report. TransUnion CIBIL maintains records on millions of individuals and therefore, sometimes information gets mixed up. Therefore, loan applicants must check their credit report for errors from time to time and if they see any errors, they must report them immediately. Getting these errors rectified is not easy and sometimes, can take up to a few weeks. So, one must act without wasting any time. 

6. Lastly, credit users must never close old credit cards and loan accounts. The age of an individual's credit history directly impacts their credit score. The older an individual's credit history, the better is their credit score. So, one should never close old loan accounts as it causes one's credit history to get deleted.

Maintaining a high CIBIL score is not difficult if you practice financial discipline and use credit wisely.

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