When you approach a bank or NBFC for a personal loan, the first thing they check is your CIBIL score. The ideal CIBIL score for personal loan is 750 and above. A score lower than that might lead to rejection or higher interest rates.
What is a Good Score in CIBIL?
While the CIBIL score for a person ranges from 300 to 900, banks or NBFCs consider anything above 750. For self-employed and salaried individuals who want to know how to apply for a personal loan, such a score becomes significant.
Keeping the score healthy is easy and abiding by all the rules and regulations set forth by financial institutions for credit repayment aids in maintaining the same.
However, many a time, the credit score falls below the acceptable mark, and a person remains unaware of it. This is sure to cause massive issues not only when applying for a personal loan, but also for a credit card.
Here are a few mistakes that one needs to avoid to improve credit score:
Multiple Loans and Credit Card Applications
Continuously applying for loans and credit card can cause critical damage to the credit score. Every time one applies for credit, the bank or NBFC will inquire about his/her credit score. With each enquiry, the credit score goes down.
Further, multiple applications show that the applicant has a credit hungry nature; financial institutions reject these applicants.
Hence, experts recommend not making multiple loans or credit card applications if one wishes to achieve a good CIBIL score.
With a good CIBIL score, one can approach NBFCs like Bajaj Finserv for a personal loan. They have an easy online process demonstrating how to apply loan which anyone can comprehend. You can also avail pre-approved offers that help you save time and get instant financing.
Continual Application Even After Rejection
Other than those mentioned above, continually applying for credit after facing rejection can account for a low CIBIL score.
When one financial institution rejects a credit application, it gets reflected in the credit report of the applicant which may lower the score.
With a second application, the bank or NBFC will also inquire about the applicant’s credit report. Upon finding the precise rejection, this financial institution may also reject the application.
Multiple rejections will bring down the score; so, financial experts recommended to wait and improve the CIBIL score for loan approval after being rejected.
Not Paying EMIs within the Due Date
Failure to pay EMIs for a product purchased also falls in the list of mistakes to avoid for improving credit score. To know how to improve CIBIL score, one must ensure that payment of all EMIs takes place within the due date.
Paying EMIs timely will help the credit score to improve; with this, one can approach NBFCs like Bajaj Finserv for a personal loan.
Not Paying the Full Credit Card Amount Due
Many a time, individuals only pay off the minimum amount due with their credit card to avoid facing rejection. They are unaware of CIBIL score meaning, and with many such payments, it would go down.
Repaying the total amount due will not only restrict the score from going down but also help it reach the CIBIL score range for personal loan.
Utilizing the full credit limit
Other than the minimum payment, using the entire credit limit of a credit card can have a bad influence on CIBIL score.
Being guarantor to a defaulter
The credit score can go down if an individual has been the guarantor to another person who has defaulted on the loan. When the person fails to repay the loan, the same will be reflected to not only his/her credit report, but also the guarantor’s score.
Therefore, to maintain a decent CIBIL score for personal loan, one needs to check who he/she is guaranteeing for a loan.
Keeping the above points in mind, one can improve their CIBIL score for loan. If looking to know how to apply personal loan, then NBFCs like Bajaj Finserv can help in this regard substantially.