Most banks and financial institutions approach the CIBIL for getting credit information of the prospective borrower. They use the Cibil TransUnion Score while deciding on the loan application of a consumer. This pursuit has been adopted due to the increase in the number of defaulters in the past.
The report produced by CIBIL has dual uses:
- The financial institution gets a better understanding about the repayment capacity of the borrower and the credit standing in the past.
- The prospective borrowers can utilize this information and can make prudent borrowing decisions.
The report will contain the following information:
- CREDIT UTILISATION: How much credit is the consumer using?
- DEFAULTING: How many accounts are past due date – how much and by how many days?
- NUMBER OF ENQUIRIES: Has the consumer applied for additional credit lines?
- TRADE ATTRIBUTES: How old are the consumer’s lines of credit? What type of credit does he have? Does the consumer have a good mix or balance of credit or is it all credit cards?
If you want your home loan application to be accepted to go ahead for purchasing your dream home, or use a car loan to buy your son the car he always wanted after graduation, here are some practices you need to stick to:
EMIS:
Pay your loan EMIs on time. If you have more than one loan running, it is prudent to track it well. Make regular and timely re-payments of your loan to maintain your credit level.
CREDIT CARD:
Never fail to pay the minimum payment on your credit card. Credit card is categorized as revolving credit and it helps in building a good credit score if payments are regular.
CREDIT EXPOSURE:
Do not apply for loans or credit cards if not required, as this would mean more credit exposure, affecting your credit score. Try checking for a top-up loan option on your existing loan as this will make your debt burden easier to manage.
REPAYING DEBT:
If there is a possibility to liquidate some of your assets, and pay off partly or the entire amount of the loan, it will help reduce your savings effectively.
REVIEW:
Review your credit history and credit score frequently, throughout the year.