If you are planning to buy your first home, you can explore the option of availing a home loan. But before you start comparing lenders or calculating EMIs, it is a good idea to check your CIBIL score, as it plays an important part in your home loan journey.
So, what exactly is considered a good CIBIL score, why does it matter, and what can you do to improve it? In this article, we explore everything you need to know about a CIBIL score.
What is a CIBIL Score?
Think of your CIBIL score as your credit report card. It is a number between 300 and 900 that shows how well you have managed credit in the past. This includes how consistently you have paid your EMIs, how much credit you have used, and even how often you have applied for new credit.
The closer your score is to 900, the better. A score of 750 or above is generally considered excellent and puts you in a good position to negotiate a better interest rate and flexible terms.
How to Check Your CIBIL Score Online?
You can easily perform a CIBIL check online. It takes just a few steps to view your credit health. Here’s how:
- Start by visiting your preferred lender’s website, as many offer a free CIBIL score check through their online services.
- Enter your basic details such as your full name, mobile number, and date of birth.
- Add your PIN code, PAN number, and email address in the relevant fields.
- Generate an OTP and then enter it.
You will be able to see your credit score instantly.
What affects your CIBIL score?
Several factors come into play when calculating your score. Understanding them can help you take the right steps to maintain or improve it. Let’s walk through the key factors:
- Payment history – This is a significant factor. Missing even one EMI or credit card payment can affect your score negatively. Paying your EMIs on time can help you maintain a good credit score.
- Credit utilisation ratio – This is the percentage of your credit limit that you use. Keeping it under 30% shows that you manage your credit limit well.
- Credit mix – A balance of secured loans (such as home or car loans) and unsecured loans (like personal loans) can be ideal. It shows lenders that you can handle different types of borrowing.
- Length of credit history – Older accounts work in your favour. Keeping long-standing credit cards active, especially those with a good repayment history, can help boost your credit score.
- Number of recent credit enquiries – Each time you apply for a new loan or credit card, it triggers a ‘hard enquiry’. Too many enquiries in a short period can reduce your score.
How to Improve Your Credit Score?
If your score is not where you want it to be, here are some practical steps you can take to improve your credit score over time:
- Always pay your EMIs and credit card bills on time
- Avoid using your full credit limit
- Limit the number of credit applications you make in a short span
- Don’t close old credit cards unnecessarily
- Check your credit report regularly for errors
Building a good score takes time, but with consistent effort, it is achievable. A good CIBIL score can help you secure a home loan at competitive terms. Take the time to calculate your CIBIL score and use the insights to plan your next steps.
