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What is Credit Rating & How to Improve Cibil Score

There are many who have experienced the disappointment of a rejected credit card or loan application! Many know the feeling when in dire times, that personal loan wasn’t sanctioned because the ‘credit score’ was not good enough!

In the past few years, as the term ‘credit score’ has attracted much attention and understanding, it is the first step to improving it.

What is a credit score?

In simple words, credit score is your rating with banks and financial institutions which is based on your record of repaying loans / credit card bills and your current credit health. Therefore, if your repayment track record is good and you do not have too many loans to repay presently, then your credit score is good, and this makes you an eligible customer for bank loans and credit cards.

A good credit score assures the bank that you are capable and responsible when it comes to the repayment of any kind of loan from it. On the other hand, a bad credit score can be one of the major reasons for the rejection of loans /credit card.

Credit rating in India

The Credit Information Bureau (India) Limited (CIBIL) maintains repayment track records of individuals and companies. In fact, the Reserve Bank of India (RBI) has mandated banks and financial institutions to check the CIBIL score of every loan / credit card applicant before approving the same. In a way, this process is a safeguard against banks’ loans into turning into non-performing assets (NPAs).

What is a good CIBIL score?

CIBIL score ranges from 300 to 900 and the higher your score is, the better score you have. According to CIBIL, a score above 700 is considered good.

A good credit rating can help in the following ways:

How to improve your credit score?

The good news is that in case you haven’t been very careful about your credit score so far, you can still take a few simple but persistent steps to improve it.