New Delhi: In today’s time, any kind of loan, whether it is home loan, car loan or personal loan, one of the most important factors for taking is your CIBIL Score. It is a three -digit numeric summary that reflects your credit credibility. While a good CIBIL score helps to get loans easily and on better terms, the poor CIBIL score can reject your loan application. If you are also struggling with the problem of bad CIBIL score and facing difficulty in getting a loan, then this information is important for you.

What is CIBIL score and why is it so important?

The CIBIL score, also known as a credit score, is a reflection of your loan repayment habits and credit history. It is between 300 and 900. The score of 750 or more is usually considered good and it assures banks and financial institutions that you are a responsible borrower and will pay your loans on time. Whenever you apply for a loan or credit card, the lenders first check your CIBIL report and score. Based on this, they decide whether to give you a loan or not, and on what interest rates and conditions.

Common causes of poor CIBIL score:

• Late EMI or Credit Card Bill Payment: This is the most common reason. Not paying on time has a negative effect on your score.

• Credit Utilization Ratio: If you use a large part of your credit card range continuously (usually more than 30%), it is considered negative.

• Applying for repeated loans or credit cards: By applying for a loan several times in a short time, lenders can understand that you are in financial crisis.

• Default or settling loan: Not being able to pay a loan or “settle” at less than the original amount with the lender causes severe damage to your credit score.

• Doing very little or no credit history: If you have never taken a loan or credit card before, your credit history will be limited, which can reduce the score.

• Mistakes in your credit report: Sometimes your credit report may contain incorrect information or errors that can affect your score.

How to improve the bad CIBIL score?

A poor CIBIL score cannot be cured overnight, but it can be improved by continuously following good financial discipline:

1. Pay on time: Pay all your EMI and credit card bills before or on the due date. For this you can use auto-debit facility.

2. Keep credit use low: Try not to use more than 30% of your credit limit. If it is high, reduce it slowly.

3. Regularly check the credit report: Examine your credit report from time to time to detect any error and fix it immediately. You can get your report from CIBIL’s website or other authorized Credit Bureau.

4. Avoid a lot of unsafe loans: More number of unsafe loans such as personal loans can affect your score.

5. Do not turn off the old credit card: If you have old credit cards that you are using responsibly, do not close them. A long credit history is good for your score.

6. Be patient: The CIBIL score takes time to improve. Maintain positive financial habits and monitor your score regularly.

What to do if a loan is not available due to a bad CIBIL score?

Do not be disappointed if your loan application is rejected due to poor CIBIL score. You can take the following steps:

• Pay attention to improving the score: First of all, try to improve your CIBIL score with the methods mentioned above.

• Apply for low amount: If you need immediate money, you can apply for a little lower loan amount, which may increase the chances of approval.

• Contact NBFCs or Fintech companies: Some non-banking financial companies (NBFCs) or new generation of fintech companies may also consider loaning loans to comparatively low CIBIL scores, although their interest rates may be higher.

• Option of secured loan: If you have any property (such as gold, property, FD), you can apply for a safe loan in exchange for it. It is low in the risk of the lender, so despite the poor CIBIL score, there is more chances of getting a loan.

• Apply with co-applicant: If someone in your family has a good score, you can apply for a loan by making them co-applicant.

• Talk to your bank: If you have an old and good relationship with a bank, you can discuss your situation with them. They can consider on the basis of your banking history.

Remember, a good CIBIL score not only makes it easy to get a loan but also helps you take advantage of better interest rates and conditions. Therefore, try to always keep your credit score good for your financial health.