CIBIL score, one of the single most crucial factors in determining loan eligibility and approval, is a numerical representation of the financial behaviour of an individual.
It is a 3-digit score ranging between 300 and 900 and generally, a CIBIL score between 750 and 900 is considered a healthy one.
Lending institutions take into account the CIBIL score of individuals before approval of a loan. It makes it extremely essential to hold a healthy CIBIL score. It becomes difficult to avail a loan for low cibil score. Hence, it is necessary to maintain a good CIBIL score to get instant approval on loan.
The best option in case of an individual looking for a low credit loan is to try and increase the CIBIL score first. All that one needs to do is follow the following methods to boost their CIBIL score before approaching a lender for availing a financial aid –
- Timely repayment
The best method to improve a credit or CIBIL score is to repay one’s EMIs on time. Timely repayment ensures higher repayment capability. It has a positive impact on the lender in question as they are assured of the timely return of their lent amount.
Subsequently, they are also more willing to provide the requested amount against nominal documents. Thus, with a healthier CIBIL score, potential borrowers can have convenient access to convenient funding.
- Pay off past debts
Financial institutions can make a hard pull on a client’s credit history and get intricate details of past repayments before approving a loan. Paying off past debts aids in improving the CIBIL score of borrowers and helps them increase their credibility since credit scores affect their eligibility to avail loans.
However, in case one is in dire requirement of a considerable sum, approaching NBFCs like Bajaj Finserv is the preferred option considering that it offers a loan for low CIBIL score. Potential borrowers can avail their Loan Against Property against nominal documentation and basic eligibility criteria.
This NBFC also offers its existing borrowers with pre-approved that simplify the application process to avail financial assistance. These offers are available on numerous financial products that include home loans, personal advances, business loan, etc. You can check your pre-approved offer by providing your name and phone number.
- Maintaining a low balance
Maintaining a low credit utilisation ratio immensely helps in maintaining and even improving the credit score of an individual. For a person interested in how to increase CIBIL score, this is an assured way though it can be time-consuming at times.
- Multiple accounts
One must be cautious not to go for multiple accounts. It is advisable to maintain only as many accounts as needed and not to indulge in more unnecessarily. Such cases of random accounts can negatively affect the CIBIL score of an individual.
- Unused credit cards
While credit cards offer individuals facilities like cashless transactions, redeeming of reward points against travel miles, cashback, etc., knowing how to use them smartly is essential. Over utilising the credit card often has a negative impact on the credit score of individuals.
Whereas keeping the credit utilisation ratio within 30% reflects lower credit hunger of the prospective borrower making him/her an ideal applicant for a loan. It also reflects his/her high credibility and repayment capability.
- Refraining from new credit facilities
Whenever an individual applies for new credit facilities, financial institutions look into their past credits. Considering that credit scores showcase the credit history in minute details, it also reflects the number of times an individual checked upon his/her credit score.
Multiple checking of the credit score has an adverse impact on the CIBIL score on individuals. Even mortgage loans influence your CIBIL score in numerous ways.
There can be scenarios when one in dire need of a loan is wondering “how can I borrow money with bad credit”. In such a scenario, especially if there is an emergency, the most convenient is to mortgage property and get their loan approved.
Under such circumstances, lenders of loan against property are less stringent about the credit score of individuals since they have the reassurance of repayment of the outstanding loan amount via liquidating the collateral.
Subsequently, post-availing of the advance, borrowers can make timely payments, prepay or foreclose the loan and build their credit history. It will help them in their future endeavours to avail financial assistance.