The Ultimate Guide to Checking Your Cibil Score Online for Free
CIBIL score is a three-digit numerical representation of a borrower’s financial behaviour and creditworthiness. There is a significant role of CIBIL score in a loan application process. A higher CIBIL score increases the likelihood of the loan application getting considered and approved by lenders.
Hence, in order to ensure quick loan approvals, borrowers must conduct a free CIBIL score check online beforehand. It will help them stay informed regarding their financial status.
Steps to check CIBIL score online for free
Here are the steps that will enable borrowers to run a free CIBIL score check online:
Step 1: First visit the official CIBIL website.
Step 2: Choose ‘Get your credit score’ or ‘check my CIBIL score’
Step 3: Fill in necessary personal details which include name, date of birth, ID proof (PAN card, voter ID etc.), email ID, PIN code and phone number.
Step 4: Then click on ‘Accept and Continue’.
Step 5: An OTP will be sent to the registered mobile number. Validate all the details using the OTP and select ‘Continue’.
Get redirected to the dashboard where borrowers can see their credit scores. Borrowers can conduct the same credit score check from their concerned lender’s official website.
Importance of Higher Credit Score
Lenders largely rely on the credit score to ascertain the borrower’s repayment capacity. Hence, borrowers must strive to maintain that. Here are the following aspects which get influenced when one has a healthy CIBIL score.
- Quick loan approvals: A good CIBIL score portrays that the individuals have handled their finances efficiently. Hence, lenders tend to give fast loan approval to those who have higher CIBIL scores.
- Higher loan amount: Lenders are likely to approve a larger loan amount to a borrower who has a higher CIBIL score than one with a substandard CIBIL score. A higher CIBIL score reflects that borrowers have been judicious with repayments, hence are considered low-credit risk individuals.
- Nominal interest rate: One of the notable benefits of having a high credit score is that borrowers can enjoy a competitive interest rate on the loan amount, which helps in lowering the overall cost of borrowing.
- Pre-approved offers: Having a higher credit score will also enable borrowers to make the most of the exclusive pre-approved offers extended by many famous financial institutions. These offers streamline the loan application process, and are available on varied financial products like home loans, loans against property etc. Willing borrowers can check the pre-approved offers by entering their name and contact number.
How to improve CIBIL score?
Here are some of the most effective ways which will help borrowers boost their credit scores and improve their financial standing:
- Clear all payments
Borrowers must ensure a positive payment history to improve their credit scores. Be it loan repayment or clearing credit card dues, borrowers’ payment discipline reflects their repayment potential and credit habits. It helps borrowers to establish creditworthiness. Late payments or defaulting on any payments will bring down the CIBIL score drastically. In case borrowers are struggling to initiate EMI payments on time, they can reach out to lenders and restructure the debts.
- Lower credit utilisation ratio
The amount a borrower uses out of the allotted credit limit also affects his/her credit score. High credit utilisation limit shows that borrowers lack fund management skills and are likely to have a debt burden and default on payments. Lenders are sceptical regarding the payment potential of borrowers who exhaust their credit limit quite frequently. The ideal credit utilisation ratio must be 30% or less.
- Opt for a healthy mix of credit
Another effective way that borrowers can follow to improve their credit scores is maintaining a balanced mix of credit. For instance, a borrower who opts for too many unsecured credit options at a time will naturally have a debt burden. Lenders see this negatively and are unlikely to approve further loan applications. Hence, it is advised for borrowers to opt for a healthy mix of both secured and unsecured credit choices for both short and long loan tenor. It will help them show that they can handle repayments for different credit options, which will finally help them build a healthy credit score.
- Avoid taking multiple loans
Applying for multiple credit options at a time will have a negative bearing on the credit score. It will not only result in an increased debt burden but will also portray borrowers as credit-hungry individuals. In addition, lenders will conduct hard enquiries which will further bring down the CIBIL score.
Also, borrowers must be mindful regarding choosing the repayment tenor and opt for one which will aid the repayment process and help them improve the CIBIL score.
Borrowers must try to maintain an ideal CIBIL score of 650 to 700 and above. However, the requirement varies from lender to lender. Likewise, there is no distinct CIBIL score for home loan, it depends on the respective financial institutions from where you are availing of the credit option.
In conclusion, CIBIL score acts as the very first impression of a borrower’s creditworthiness for the lending institutions. Hence, it is crucial for borrowers to carry out a free CIBIL score check online. It will not only help them gauge their financial standing but will enable them to negotiate for better loan terms and identify whether there are any discrepancies in the CIBIL report.
