Pesky phone calls pushing loans and credit cards can be quite an irritant. But say yes, and it can get worse. Securing a loan isn’t always as easy as it seems. You’ll be asked 20 questions, required to fill forms, submit a host of documents, and then told to wait agonisingly for several days for someone at the lender’s end to evaluate your credit worthiness, and say “Aye” or “Nay”.
Surprisingly, there is a way to make this process less tedious—a route that also encourages you to lead a disciplined life with credit. Enter Credit Information Bureau India Limited (CIBIL)’s credit score. The Cibil credit score is a 3-digit numeric evaluation of your credit history and financial health. While these CIBIL scores can range from 300 to 900, a score above 700 gives you a good shot at a swift loan approval. Data compiled over the years shows that 90% of loans are disbursed to people with scores of 700 or more.
Having a CIBIL score allows your lender to skip a few steps. Once you apply for a loan, the lender checks with CIBIL for your credit report and credit score. If your credit score is good, it only leaves the documentation to be scrutinised and verified before a loan approval. Also, a good score can help you negotiate a better rate. A borrower with a high credit score can wrest a good bargain from lenders while loan shopping.
But good CIBIL scores have to be earned. For scoring high, you need to have a track record of regular and on-time payment of bills and dues. Your present credit outstanding across loans and credit cards must be nominal vis-a-vis your income. You shouldn’t have any large outstanding on your credit cards; the number of cards being used actively must be few; and these must be adequately and regularly serviced. There must not be too many loan applications from you at any point in time, as this can be viewed as an indicator of financial stress. If you come up trumps on all these counts, you can expect to clock a high score.
So how do you get a credit report and a credit score? For CIBIL score check online, log onto www.cibil.com, download the form, attach the documents and send them across with a demand draft of Rs 470, or just Rs 154 if you only want a credit report. While the credit report is an account of your credit behaviour and credentials, it stops short of grading your credit servicing ability. The credit score does both. So if you think you are a high grader, go for it. What the exercise also helps you do is discipline yourself by reviewing your credit report every few months. So get started.