Wondering what a CIBIL score is? Well, it is a 3-digit number that lending institutions use to determine a loan applicant's creditworthiness. According to TransUnion CIBIL, this score ranges from 300 to 900 and is a key part of your overall credit information. Credit bureaus calculate the CIBIL score based on your credit history and overall credit-related behaviour. Since the deal has a lower risk, they try to attract you by offering you a competitive interest rate.
Therefore, when planning to apply for a loan or a credit card application, check your CIBIL score online and ensure it meets the lender’s minimum score requirement to get the best loan deal.
Whenever you apply for a loan, your credit score is the first thing the loan provider checks to decide whether to approve your loan application. The higher the CIBIL score, the higher your credibility in the eyes of the lender. Most lending companies expect a score of 750 or above, which signifies your overall credit behaviour in the past. Those who handle credit responsibly gain the lender’s trust and have a higher chance of getting approval with lower interest rates and favourable terms and conditions. Therefore, before applying for a loan, calculate your CIBIL score for free online and ensure you have a decent one.
Most lending institutions have an online credit score calculator you can use to calculate CIBIL score. You can also visit TransUnion CIBIL’s official website directly to perform the action. Want to know how the CIBIL score is calculated? These are the steps to follow:
A CIBIL score calculator helps calculate credit scores based on several factors that affect your credit, including your repayment history, outstanding credit account balances, debt-to-income ratio, credit utilisation ratio, length of your credit history, and other parameters. Therefore, handling credit responsibly is advisable to build a decent score that improves your loan eligibility.
Want to know how to improve your CIBIL score? Here are a few tips to improve your CIBIL gradually:
A credit score calculator calculates your CIBIL score based on several factors, including
Let’s look into the details:
Your repayment history is one of the most crucial factors affecting your credit score. Missing the repayments leads to penalties and reduces your credit score. Therefore, always make your EMI and credit card bill payments on time to maintain a decent credit score.
Credible borrowers may get an ample credit limit on credit cards and lines of credit. However, that does not mean you should spend it all. Using the entire available credit limit will increase your debt burden and boost your credit utilisation ratio, projecting you as a credit-hungry borrower. Use credit only when needed and remember to repay on time.
Diversifying your credit portfolio with different types of credit will show that you can handle credit efficiently. Therefore, maintain a diverse credit mix in your portfolio with secured, unsecured, short, long, and other types of loans. Also, get credit cards and lines of credit to maintain diversity.
Too few or too many credit lines are detrimental to your credit portfolio. Borrow only what you can repay and make repayments on time to build a strong credit history.
Whenever you apply for credit, the credit agency pulls a hard inquiry on your credit report, which reduces your credit score by a few points. Too many inquiries within a short period demonstrate credit-hungry behaviour, reducing your eligibility for more credit.
The ideal CIBIL score you must have depends on the type of loan you want to apply for. Here is a credit score scale of standard CIBIL score requirements.
Type of Loan | Minimum CIBIL Score Requirement |
Personal Loan | 700-750 |
Business Loan | 700 |
Home Loan | 750 |
Two-wheeler Loan | 750 |
Used Car Loan | 750 |
Loan Against Property | 750 |
Although the CIBIL score is a crucial parameter that lenders use to determine your eligibility, reliable NBFCs, like Hero FinCorp, also offer loans to individuals with low CIBIL scores. Here are a few tips for applying for a loan with a low CIBIL score:
Maintaining a high credit score will come with many benefits in terms of loan eligibility. Those with a decent score qualify for credit easily and quickly at lower interest rates. Therefore, using the best credit score calculator to check your CIBIL score is crucial to see where you stand. If it is low, don't worry, as you can still apply for a loan from Hero FinCorp by following the tips in this article.
CIBIL score calculation depends on various factors, including your repayment history, credit utilisation ratio, DTI ratio, outstanding balances, etc.
A CIBIL score above 700 is good for getting the best loan deals.
Although most lending institutions expect a score above 700-750, 625 is a fair score that may attract approval but at a higher interest rate.
Yes, 725 is a good credit score to attract easy approval at lower interest rates.
Visit the CIBIL’s official website to calculate your CIBIL score free online without paying any charges. You can also use the CIBIL calculator at a lending institution’s website to check your credit score for free.