CIBIL stands for Credit Information Bureau India Ltd. It is considered India’s first Credit Information Company. As a Credit Bureau, CIBIL’s responsibility is to collect and manage payment records for loans and credit cards, for both individuals as well as commercial entities.
As these payment records are collected each month from various financial institutions, a credit information report, as well as a credit score are issued. This allows lenders to evaluate and potentially approve those looking to apply for new loans, therefore, making this score extremely valuable.
A New and Improved Way to View Credit
CIBIL has now introduced CIBIL Transunion Score 2.0. This is simply an improved version of the original CIBIL Credit Score and has been created keeping in mind the current habits and changes in both consumer profiles and credit data.
Financial institutions are slowly transitioning to this new Credit Score, and you might notice a difference in your own score with this change. Most individuals notice a slight drop in their score with the 2.0 version. However, this drop will not affect the lender’s decision during the loan approval process, since both versions of the score have different score eligibilities. Some financial institutions make this approval process simple, like Bajaj Finserv, who offer a 100% online approval process for all of their Loan options, making it easier than ever to obtain your funds quickly and conveniently.
Short Credit History? No problem!
Yet another aim of the CIBIL Transunion Score 2.0 is to make it easier for individuals or companies with a short credit history to get approved for the loan of choice. It seeks to classify new borrowers with a credit history of less than 6 months into specific categories. These borrowers were previously labelled under the category of “no history” in the original version of the credit score. Individuals are rated on a range of 1 to 5, with 1 being “high risk” and 5 being “low risk.” The higher your score is, the lower amount of risk you will have on your credit report. If you are still feeling a bit confused about what is involved in your credit score, Bajaj Finserv provides a Financial Fitness Report for a small fee to all of their salaried customers, allowing you to view and understand your own personal credit score.
Improving Your Credit Score
Now that you understand the importance of your score, let’s look at some ways on how to improve your credit score.
- Pay on time: Your ability to pay your bills on time can bring your score to new heights since missed or delayed payments can have an extremely negative effect on your score.
- Lay low: Keep balances on credit cards and other forms of debt as low as possible, as high numbers of outstanding debt can impact your score negatively.
- Proceed with caution: Only apply for new credit accounts when it is absolutely necessary. Having numerous accounts can easily become overwhelming, and most likely won’t do much for your current credit score.
- Pay things off: Instead of moving your debt around, pay it off. Also do not cancel unused cards to improve your score, since owning the same amount, but having a smaller amount of open accounts can actually lower your score.
After you apply these tips to improve your CIBIL Score, you’ll find an entirely new plethora of financial options at your doorsteps, such as the many attractive Personal loan, Business loan and Home Loan options