What Is a Good Cibil Score? Learn Seven Ways to Improve Credit Score

Have you ever wondered what is a good cibil score and how it affects your plans to buy your dream house? A credit score is a three-digit numerical expression of your entire credit history. It ranges typically between 300 to 900. It determines your creditworthiness and is prepared, taking into account all the secured and unsecured loans and any other debts that you may have or have had before.

In India, this credit is provided by Credit Information Bureau Limited (CIBIL), because of which the credit score is also called the cibil score. A credit score of 700 or above is considered essential for easy and fast availing of the available credit facilities. But how do you know what your credit score is? Keep reading to learn more about the cibil score and ways to improve it.

What is a Good Cibil Score?

A good CIBIL score range is a score ranging between 700-900. It ensures quicker approval of loans, a higher loan amount, a more extended payment period, and a low-interest rate on the credit facility. In other words, a good CIBIL score proves the creditworthiness of a borrower to the lender.

The table below shows different CIBIL scores and the possibility of loan approval with the scores.

CIBIL Score	Creditworthiness	Probability of Approval
<600	Poor	Low
600-649	Doubtful	Difficult
650-699	Satisfactory	Possible
700-749	Good	High
750-900	Excellent	Very High

Note, that NH or NA implies that a person doesn’t have any credit history yet.

How Is One’s CIBIL Score Calculated?

The credit ranking agency CIBIL calculates credit scores based on several factors of the borrower’s profile including their payment history, applications for credit, existing loan accounts, loan tenures, as well as credit mixes. Ensuring that your credit score is well-maintained, is an activity that continues throughout one’s life to avail yourself of home loans, personal loans and more. 

How To Improve Cibil Score Immediately

If you have a bad credit history for some reason or the other, as everyone goes through difficult financial circumstances, you can also work on improving them quickly. So if you are wondering how to increase your CIBIL score, you can use the following methods:

• Pay your loan EMIs on time, as timely repayments indicate a good borrower profile
• Clear your existing debts as quickly as possible so that your borrowing capability increases
• Never exhaust your credit limit as overspending will make repayments difficult
• Don’t take multiple loans at one as repayment of different loan accounts at a time can put pressure on your monthly expenses
• Avoid becoming a joint credit account holder as both the partners’ credit history can get affected at a time
• Be sure to check for any mistakes in your CIBIL score and report any inconsistencies to avoid hurting your credit score
• Always know your CIBIL score at any given time so that you can reap the advantages of many new-age credit rewards platforms such as CRED, and even offers from individual banks

What is a Good Cibil Score for a Home Loan?

A credit score between 700-900 is considered a good CIBIL score for a home loan. Lender prefers a borrower’s CIBIL score around 700 for a home loan, though a credit score of 750 or above is preferred chiefly and is considered the best CIBIL score for a home loan. It reflects a borrower’s creditworthiness, that is, his repayment capacities.

Lenders generally have to offer a few lakhs to crores to borrowers as home loans. In case of default, the lender would face a considerable loss. Therefore, the lenders check and verify CIBIL scores with due care to reduce the chances of defaults. However, people with average CIBIL scores may find it challenging to get home loans mainly because lenders are very particular about CIBIL scores while lending any amount of money for home loans.

Good Credit Score for a Personal Loan

A personal loan is when a borrower does not need to put up his property as collateral to secure the loan. A credit score between 700-900 is considered an ideal CIBIL score for a personal loan. However, there are instances when people with scores as low as 670 have successfully managed to get personal loans at low-interest rates.

What is a Good Credit Score for a Car Loan?

There have been times when people are surprised to find that their car loans are rejected due to a low CIBIL score. There is no definite minimum credit score required for applying for a car loan in India. But exactly, how much CIBIL score is good for a car loan?  It is advisable to have a credit score between 700 to 900. A CIBIL score of 750 or above is ideal for getting a car loan approved with minimum hassles.

What Are the Best Ways to Improve Your Credit Score?

A high CIBIL score can help you get higher amounts of loans at a low interest rate. It increases the chances of approval of your loan manifold. If you are planning to apply for a loan recently, here are several ways through which you can boost up your credit score-

Repaying Credit Card Dues on Time

Repaying outstanding credit dues can help in getting an improved credit score. In addition, timely payment of dues prevents interest from mounting and helps get your credit score in the long run.

Increase Credit Limit

The credit utilization ratio has a significant impact on your credit score. By increasing the credit limit, your credit utilization ratio is substantially lowered. Therefore, it instantly helps in boosting up your credit score.

Restricted Credit Utilization

Using more than 30% of your credit card limit is considered to be high credit utilization. Similarly, not using your credit card at all can adversely affect your credit score. Therefore, to improve your credit score, restrict your credit card limit to less than 30%. 

Opt for a Longer Repayment Duration (for Loans)

While borrowing, you may opt for longer repayment durations. This ensures a low EMI. In addition, it lessens the burden on you as you can make regular and timely repayments of the EMI. Finally, it can help you boost your credit score to a great extent.

Avoid Taking too Much Debt at a Time

Taking too much debt may increase the financial burden on you. You may perennially remain trapped in a debt cycle. This increases your chance of being a defaulter in the future and lowers your credit score to a great extent. Too many debts also indicate that you always have insufficient funds. This affects your credibility as a borrower. Consequently, your creditworthiness is lowered, and you get a low credit score. So, to get a good credit score, avoid taking too many loans at a time.

Never Give a Hint of Risk

Missing on credit card payments or revolving credit are often the first signals of stress/risk associated with a borrower’s profile. Since credit scoring models are designed to pick up the early signs of changes in a borrower’s profile, you must maintain a disciplined approach and prevent taking actions that may be interpreted as “risks”. This can help you improve your credit score to a great extent.

Build a Diversified Credit History

A sound credit history reveals your creditworthiness and increases the lender’s confidence in your ability to repay the amount. To build a good credit history, try opting for a healthy mix of secured and unsecured loans for shorter and longer durations. It can substantially boost up your credit score.

Benefits of Good Cibil Score

A good credit score range is a score ranging between 700-900. The importance of a good credit score is that it is associated with several benefits. Some of these benefits include:

Higher Chances of Loan Approval

The moment you apply for a loan, every lender checks your credit/CIBIL score to verify your creditworthiness, i.e., your ability to repay a loan amount with interests within a set period. A good credit score in India will automatically increase your probability of loan approval. It is mainly due to your sound credit history and records of regular and timely repayments of the loan amount.

Higher Loan Amount

A good credit score for a loan reflects your creditworthiness. It shows that you are a responsible borrower and have a record of regular and timely repayments of the loan amount in the past. Consequently, a good CIBIL score instils the confidence of a lender in you who may no longer be hesitant to offer you a higher loan amount.

Low Interest Rates

A good CIBIL score helps you in getting loans at a low interest rate. The interest rate is determined based on the probability of default. Since a good credit score reflects sound creditworthiness with minimal chances of default, the lender tends to charge a low interest rate on your loan.

Longer Repayment Period

A good credit score instils the lender’s confidence in you. The repayment period is determined based on the chances of default. Higher events of default make the lenders doubtful. Consequently, they set a shorter period for repayment. A good CIBIL score reflects your sound creditworthiness. Lenders may therefore assign you a more extended repayment period. 

Chances of Getting Multiple Lenders

A good CIBIL score helps build your reliability as a loan applicant. A good CIBIL score reflects your creditworthiness and instils the lender’s confidence in you.  Consequently, multiple lenders may be interested in giving you loans. Therefore, it would enable you to make a more informed and wise decision. You can compare the lending conditions of different lenders and choose the best one for you.

You are worried regarding what is a good cibil score for your home loan? Fearing that your loan request would be rejected due to a poor cibil score? Do not worry! The days of concerns are over. NoBroker is now offering its experts’ advice for free to help you boost your credit score. So, what are you waiting for? Hurry!

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