FOROES

Keeping An Eye On Your Credit Score: The How And Why

In recent times, many of those searching for financial aid in the country have come across closed doors and weary bank managers. The sole reason behind each loan seeker’s disappointment is usually a bad credit score. The importance of maintaining a good score can’t be stressed enough, especially if you’re looking to take out a loan yourself. “What’s a credit score?” you may ask. Well, it’s a simple statistical indicator that determines the likelihood of you paying back a loan which you’ve borrowed. Let’s look at it like this, if you want to buy a car, you’ll probably look through a ton of magazines and reviews online to choose the one that suits you best. It’s kind of the same for banks and financial companies as well—they’re looking to loan out money, but they don’t know who their safest bet is. And that’s why they refer to the credit rating.

Financial institutions make the most profitable decisions by using the credit score as a primary indicator. So why is it important to maintain a good credit score? Let’s just say that you won’t ever be able to take a loan if you’ve got a bad rating. Here’s how it works.

The CIBIL Score And Its Components

In India, there are 4 major credit bureaus that gather information related to a person’s credit history and spending habits. These agencies formulate the credit score based on different parameters. The first and foremost of these 4 bureaus is the Credit Information Bureau (India) Limited (CIBIL), set up in 2000 by the Indian government to play a critical role in the country’s financial system.

There are several ways to maintain a good credit score, and they all revolve around the different aspects of the CIBIL rating system. Every month, CIBIL receives the financial history of individuals who’ve taken out loans from various banks and credit institutions in India. Using this information, the organisation computes the credit score of each individual based on 5 parameters. These factors include your credit repayment history, which accounts for 35% of the score, and your current level of indebtedness, which makes up a further 30%. The amount of new credit that you’ve recently taken out or applied for affects your score as well, and carries a weightage of 10%. The diversity of your credit schemes makes for another 10% of the rating, while the last 15% is decided by the amount of time you’ve been using credit.

Below, you’ll find a few tips to keep a good credit score.

How To Maintain A Good Credit Score In India

It’s important that you know how to maintain a good credit score, especially if you’re a potential loan seeker. For instance, if you want a beautiful house to live in, then chances are you’ll need a home loan. Building your own house in India could prove to be quite an expensive affair, and you’ll need financial aid to fulfil your dream. Bajaj Finserv gives home loans for this very purpose. Their online process is highly optimised, and given the right qualifications, your application will be approved in less than 3 minutes. You’ll find some of the lowest interest rates in the country on homes loans at Bajaj Finserv.

Setting up a business of your own is just as hard; it’d be incredibly difficult for you to fund your own business without external aid, and that’s only possible if your CIBIL rating is relatively flawless. If you’re looking at some quick financing options for your company, then you should definitely check out the business loans offered by Bajaj Finserv.

Bajaj Finance Limited, the lending and investment arm of Bajaj Finserv group, is one of the most diversified NBFCs in the Indian market catering to more than 6 million customers across the country. Headquartered in Pune, the company’s product offering includes Consumer Durable Loans, Lifestyle Finance, Personal Loans, Loan against Property, Small Business Loans, Home loans, Credit Cards, Two-wheeler and Three-wheeler Loans, Construction Equipment Loans, Loan against Securities and Rural Finance which includes Gold Loans and Vehicle refinancing Loans. Bajaj Finance Limited prides itself for holding the highest credit rating of FAAA/Stable for any NBFC in the country today.

Exit mobile version