Your CIBIL score is a 3-digit number, between 300 and 900, assigned by TransUnion CIBIL, a credit rating agency. Your CIBIL score helps lenders gauge your creditworthiness and a good CIBIL score, generally above 750, puts you on track to qualify for both long- and short-term loans.
Moreover, once you get approval, through timely, responsible repayment, you can use the loan as a tool to further increase your credit score. Keep reading for more information on credit scores by CIBIL and how to improve a CIBIL score with a personal loan.
What are the Different CIBIL Score Ranges?
As mentioned before, a CIBIL score falls between 300 and 900, with scores of 750 and above being considered as ideal. Nonetheless, CIBIL scores can be categorised as good, bad, poor, and so on, and knowing which category your score belongs to will indicate to you how to increase the credit score.
The different CIBIL score categories are as follows.
- NA/NH means no credit history
- 300 to 550 is considered to be a bad CIBIL score range
- 551 to 649 is considered to be a poor CIBIL score range
- 650 to 699 is considered to be a fair CIBIL score range
- 700 to 749 is considered to be a good CIBIL score range
- 750 to 900 is considered to be an excellent CIBIL score range
What Factors Decide Your CIBIL Score?
Your CIBIL score is based on the following parameters.
- Your past performance with debt
- The types of loans you have taken
- The tenor of the loans
- The amount of credit availed
- Ongoing loans and credit utilization
How to Increase a CIBIL Score with a Personal Loan?
A personal loan is a collateral-free, short-term loan that can be used to tend to urgent needs such as travel costs, medical bills and wedding expenses. Further, using a personal loan smartly can lead to an increase in your CIBIL score. Here’s how.
Personal loans impose no spending restrictions and so, you can use the loan to repay high-interest loans and credit cards that have pending dues. By getting rid of expensive loans and penal charges you improve your management of debt and this can boost your credit score.
Irrespective of whether you use the consolidation loans or not, responsible repayment is key to a CIBIL score increase. Most lenders provide a flexible repayment tenor of up to 60 months with a personal loan. You can use the long tenor to bring your EMIs within your budget and build a healthy repayment track record.
Since CIBIL considers the type of loans availed, you can improve your CIBIL score by taking on both asset-backed and collateral-free loans.
What to Consider when You’re Opting for a Personal Loan?
If you’re applying for a loan with an eye on how to improve the CIBIL score assigned to you, bear in mind these points.
- Do not apply to multiple lenders simultaneously as this will be counterproductive. Every time you apply for a loan, a hard inquiry is initiated into your credit report and this causes your score to drop by 3 to 4 points.
- Since a personal loan is an unsecured loan, delaying or defaulting on EMI payment bring your CIBIL score down. Therefore, you should repay the loan within the tenor, as per your repayment schedule.
- Avoid pre-paying the loan, as a longer credit history comprising consistent and timely monthly payments will help improve your CIBIL score.
Now that you know how to improve a CIBIL score using a personal loan, ensure that you pick the right one to do so. Opt for a Personal Loan from Bajaj Finserv to access a high sanction of up to Rs.25 lakh that you can repay over a flexible tenor of up to 60 months.
These facets can help you take your CIBIL score up a few notches and you can further use the Flexi Loan facility to enhance your borrowing experience. It allows you to borrow from your sanction in parts, multiple times, without additional applications or charges.
Moreover, here, interest is applicable on amount borrowed only and not on the entire sanction.
So, check your pre-approved offer from Bajaj Finserv to get an instant loan on customized terms and keep these tips in mind to improve your CIBIL score in the new year!