A CIBIL Score is a triple-digit score derived based on your credit history. Lenders often use the CIBIL Score as a scale to measure a borrower’s reliability. Therefore, it is crucial for lenders when you apply for a credit card.
Meaning of Credit Card CIBIL Score
The CIBIL Score ranges from 300 to 900. The score range is roughly divided into five different categories. Each category denotes your level of creditworthiness.
|Less than 600||Very Low|
|600 – 649||Low|
|650 – 699||Fair|
|700 – 749||Good|
|750 – 900||Excellent|
You can check your Credit Score online to determine which category you belong to.
What Is A Good Credit Card CIBIL Score?
Generally, a CIBIL Score of 700 is considered a good score. If you have a score of 700, banks may provide you with a credit card without any hassle. Moreover, you may also be pre-approved for credit cards. Therefore, you can check your credit eligibility to see existing pre-approved credit offers for your account.
What Affects A Credit Card CIBIL Score?
Your Credit Score is calculated based on the CIBIL Report (CIR) findings. In addition, the CIR contains information regarding your account and credit behaviour. Therefore, borrowing and repayment history can greatly affect your overall Credit Score.
- Repayment History: Your repayment history accounts for 30% of your Credit Score. Any missed repayment on due EMIs or credit bills can considerably reduce your score. Your score may drop by 100 points because of poor or inconsistent repayments.
- Credit Limit: Using more than 50% of your credit limit can reflect poorly on your score. In addition, applying for a credit limit increase multiple times within a short time may bring down your credit score. However, increasing the credit limit when the bank offers may have a positive effect.
- Multiple Credit Card Applications: Applying for a credit card from different lenders can hurt your credit score. Moreover, resending an application after rejection can affect the credit score greatly.
- Credit Type: Credit scores also consider the type of loans or credit you have applied for. Having a single type of credit history can negatively affect your credit score.
- CIR Errors: CIRs are usually accurate. However, there may be errors that can affect your credit score.
How To Improve CIBIL Score?
The process of improving a CIBIL Score requires patience and consistent efforts. However, the following tips can help in maintaining and improving credit scores.
- Check your CIR as frequently as possible. CIBIL provide one free check each year. In addition, some lenders may offer unlimited free credit scores and reports. Checking the report helps to root out any discrepancies and fraudulent payments.
- Opting for a balance of secured and unsecured loans can help to improve your credit score drastically.
- Repay all due credit bills and EMIs within the repayment period.
- Maintaining a long credit history can help increase the credit score by 25%. In addition, a long, consistent credit history can show that you are a reliable and trustworthy borrower.
- Repay existing credit card debts as much as possible to decrease your debt-to-income ratio. In addition, make sure your monthly due amount is less than 30% of your monthly income.
Knowing how to improve CIBIL Score is a vital element that all credit card applicants must be aware about. This is because the credit score can affect the probability of credit card approval. Moreover, lenders decide on the approved credit limit based on your credit score. Apart from it, lenders are more likely to offer better deals on credit cards if you have a good CIBIL Score. Therefore, all applicants must focus on improving their credit scores and maintaining high ones.