When you apply for some kind of loan or credit card, the bank or finance company first checks your credit score. Through this, banks want to know whether you have ever taken a loan before and if taken, what has been your record of repaying it. If you use credit cards on time, and pay the bill on time and pay the EMI of the loan at the right time, the bank grants your loan without any hurdles. That is why it is necessary to keep in mind your credit score, also known as CIBIL score while applying for a home loan, vehicle loan, personal loan or any other loan.
Why CIBIL Score is so important
Through CIBIL Score, the bank or any kind of calendar tries to see, that it is not that the person seeking a loan has not defaulted in paying any loan, credit card bill in the past. This shows the economic condition of any person. If your credit score is less than a limit, most lenders reject your loan application. That is why the importance of the CIBIL Score or credit score is very high.
Avoid taking a variety of loans together:
A variety of loans and credit cards from many banks can make you fall into the vortex of debt. So a good CIBIL Score is necessary to ensure that you do not take more than one loan at a time as the effect is seen on your CIBIL.
Debt payment:
Debt affects your financial health. Whether it is a credit card bill or the EMI of any kind of loan, timely payment is very important. Your credit score gets a lot of impact when you don't pay the credit card bill on time. Also, credit card companies and banks impose fines for not paying bills, or EMIs on time and your credit score also falls a lot.
Increase credit limit:
If your repayment history is good and has a good track record, the bank can increase your credit card limit. If you do not spend too much, such an offer should be accepted. This improves your credit utilization.
Don't let credit limits cross:
People usually start spending unshakeable expenses when there are many credit cards. We should avoid such expenses. No one should spend more than 30% of the total credit limit of the credit card. Therefore, credit utilization is a very important aspect.
Check credit report:
Nowadays, CIBIL Score is the facility to check online. Therefore, it is necessary to check the credit report before applying for the loan as there may be some lapse in calculating CIBIL Score at times. So, it can be corrected first.
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