Home Finance How To Analyze If You Are Eligible For A Loan?

How To Analyze If You Are Eligible For A Loan?

Whenever we are faced with a financial situation, the first thing that we can think of is applying for a loan. A loan can be seen as the easiest way out since you are guaranteed that you will get the money and you can also repay the financial institution or the lender back on a monthly basis which depends on your financial condition.

When applying for a loan, the financial institutions and lenders check your cibil credit score as it proves your creditworthiness and your repayment ability. Your credit score is affected by a lot of things. If you have defaulted on your debt payment in the past, it will negatively affect your credit score. On the other hand, if you have paid off all you debt on time, it will positively affect your credit score.

What is CIBIL Score?

The Credit Information Company (CIC) keeps a track of your Credit Information Bureau (India) Limited (CIBIL) score. The CIC collects and keeps a record of all your payments which are related to your loans and credit cards. Your financial institution or lender submits these reports on a monthly basis and your CIBIL score is updated. When you Apply for a Loan, the banks or lenders request this information from CIC and they are used to check your creditworthiness.

What Does Credit Score Mean?

The CIBIL score ranges between 300 to 900 and a good credit score is considered somewhere above 750. If you have a good credit score, your loan approval process will be faster. Additionally, you will also be offered a lower rate of interest by the bank. If you have a low rate of interest, your loan approval process will be longer and more tedious and you will have to pay a higher rate of interest on your loan. The credit score is calculated on the basis of your past and present credit history. They are also related to the discipline you maintain while repaying your loan.

Tips to Improve your CIBIL Score:

  • Check your credit card balances on a regular basis. You also need to make sure that you pay all your credit card dues on time.
  • Check your credit card report regularly. You need to keep a track of your statements and you should watch out for any possible errors,omissions or frauds are things you should watch out for.
  • If you act as a guarantor to someone and if that person defaults on their debt payment, it will negatively affect your credit score.
  • Having a high credit score helps you have a better position to negotiate the interest rate and others terms.

You can check your CIBIL score online. Knowing where you stand is a far better option that being in the dark. You will have to fill up all the necessary information asked in the application and you will have to pay a small fee of INR 500.00 which is subject to change.

If you have a low credit score, there are ways in which you can improve your credit score. You can also seek help from consultants who can guide you better as to what you need to do in order to improve your CIBIL score. When it comes to financial matters, you need to stay on top of your game and keep a track of everything. Before you apply for a loan, you should do a proper research on what type of loan you need and which financial institution you want to opt for.