Two bright students, Himanshu and Zakir, were engrossed in a serious discussion about their future plans. Amidst the animated chatter about career aspirations and dreams, they stumbled upon the topic of the CIBIL score.
Himanshu, with a sense of curiosity, asked Zakir, “Hey, if we want to apply SBI loan then conducting an SBI CIBIL score check is crucial, do you know how to do this?”
Zakir replied, “Nope, what is it?”
Himanshu, the more financially savvy of the two, explained, “Well, Zakir, your CIBIL score is like your financial report card. It reflects your creditworthiness and helps lenders decide whether to approve your loan or credit card application. It’s crucial for our financial well-being, my friend!”
Intrigued, Zakir asked, “How do I check it?”
Here’s a step-by-step guide for Zakir and anyone else curious about their CIBIL score –
Visit the CIBIL website
Open your browser and go to the CIBIL website. It’s the official platform for checking your credit score.
Click on ‘Get your CIBIL score’
Find the option that says ‘Get Your CIBIL Score’ and click on it.
Fill in the required details
Enter your personal information like name, date of birth, and PAN card details. Make sure the information is accurate.
Verify your identity
Follow the verification process, which may include answering security questions or providing additional details.
View your CIBIL score
Once verified, you’ll be able to view your SBI CIBIL score instantly. Take note of the score and other details provided.
By using these steps, you will get to know about your score and in the case of any CIBIL dispute, you can resolve them too by connecting with the bureau or the concerned lender.
As Himanshu and Zakir delved deeper into the conversation, they realised the significance of maintaining a good CIBIL score. Here are the top benefits they uncovered –
Lower interest rates
Lenders offer lower interest rates to individuals with good credit scores.
A high CIBIL score increases the chances of loan approval.
Credit card approval
It’s easier to get approved for credit cards with a good CIBIL score.
Faster loan processing
Lenders trust individuals with good credit, leading to quicker loan processing.
A high score gives you negotiating power for better loan terms.
Higher credit limits
A good score may result in higher credit card limits.
Maintaining a good score reflects financial discipline and responsibility.
Some employers consider credit scores during the hiring process.
Excited about the benefits, the duo decided to share tips on how to build and maintain a healthy credit score of 750 and above –
Limit credit card usage
Avoid maxing out your credit cards; keep balances low to maintain a healthy credit utilisation ratio. A lower ratio indicates that you are not overly reliant on credit, which is viewed positively by credit agencies.
Pay bills on time
Timely payments are crucial for maintaining a good credit score. Payment history is a significant factor in credit scoring, and consistently paying bills on time reflects your reliability as a borrower. Late payments can have a negative impact, so setting up automatic payments or reminders is a wise strategy.
Diversify your credit types
Holding a mix of credit, such as loans and credit cards, is beneficial for your score. It shows your potential to manage distinct credit variants responsibly and contributes to building your credit history.
Check credit report regularly
Regularly checking your credit report allows you to identify and address any errors or discrepancies promptly. Errors in your report can adversely affect your credit score, so it’s essential to review and report any inaccuracies to CIBIL for correction.
Avoid opening too many accounts
Opening multiple accounts in a short period can be perceived as risky behaviour. Lenders may view it as a sign of financial instability. Be strategic in opening new accounts and consider the impact on your overall credit profile.
Use credit wisely
Don’t use credit impulsively. Make informed financial decisions based on your needs and ability to repay. Responsible credit usage reflects positively on your credit history.
Don’t close old accounts
Older accounts contribute positively to your credit history. Closing them can shorten your credit history, potentially affecting your credit score. Keep your older accounts open unless there are compelling reasons to close them.
Clear outstanding debts
Prioritise clearing outstanding debts to improve your credit score. Reduced debt levels positively impact your credit utilisation ratio and overall creditworthiness.
Having an emergency fund provides a financial safety net, reducing the need to rely heavily on credit during unexpected situations. It demonstrates financial prudence and stability to lenders.
Keep credit inquiries low
Limit the number of times your credit is checked. Multiple inquiries within a short period can signal financial distress or a high level of risk to lenders.
Be cautious when opening joint accounts, as they impact the credit scores of both parties. Joint responsibility means that any positive or negative activity affects both individuals’ credit histories.
Stay within credit limits
Avoid exceeding credit limits to maintain a positive credit utilisation ratio. Consistently staying within your credit limits shows responsible credit management.
Inform changes of address
Ensure your address is updated with creditors to receive bills and statements promptly. Missing important financial information due to an outdated address can lead to missed payments and potential credit issues.
Long-term financial planning
Plan your finances for the long term. Consistent, thoughtful financial planning reflects positively on your credit score and overall financial health.
Use secured credit cards
Secured credit cards can be a helpful tool for building credit, especially if you’re starting with a limited credit history. These cards require a security deposit and are a responsible way to establish and improve credit.
Try to avoid settling accounts for less than the full amount. While it may provide short-term relief, settlements can hurt your credit score.
Limit loan applications
Too many loan applications in a short span can be a red flag to lenders. Each application typically results in a hard inquiry on your credit report, potentially affecting your credit score.
Stay informed about financial matters and make educated decisions. Understanding the principles of credit, debt, and personal finance empowers you to make sound financial choices.
Seek professional advice
If needed, consult a financial advisor for personalised guidance. Professionals can offer tailored advice based on your specific financial situation, helping you make informed decisions to improve and maintain a healthy credit score.
As the conversation wrapped up, Himanshu and Zakir felt more aware and realised that a good CIBIL score wasn’t just a number; it was a key to unlocking financial opportunities and securing a stable future.