When you opt for a personal loan in Guwahati the first step that you have to carry out is provide your credentials and some basic documentation to the lender. Based on your application, the personal loan providers verify your identity first and then one of the first things they do is check your CIBIL credit score. This score has a very important role in the loan processing cycle both for you and the lender. This is why it is highly recommended that when you apply for a loan, you should be well aware of where your CIBIL score stands at.
Why is CIBIL score significant?
When a lender receives an application for a loan, he does not know who the borrower is, how trustworthy they are and how capable of paying back the loan. Before he approves the loan, the lender must have a good idea of your overall credit worthiness. This information must come to him from a completely trustworthy and reliable source. This is what the CIBIL credit score does- act as a completely reliable source of accurate information about an individual’s credit worthiness and financial health.
The CIBIL score takes into account your debts, your repayments, any outstanding bills you have, any loans you have defaulted on- everything that will give an indication of how financially disciplined you are in addition to your credit history. You can see how this can be invaluable to personal loan providers who are trying to figure out if they can risk their money by giving it to you as a loan.
When your CIBIL score is low, that is, say 400, the lender knows that you are an extremely high risk as a borrower and the chance of him losing his money is very high. If your CIBIL score is 800, the lender is very keen to give you the loan because the chances of him getting repayments on time is very high. In short, a good credit score, that is, above 750, is an indication to personal loan providers that you may make a very good customer for them. This prompts them to offer you better rates and terms when you apply for a personal loan in Guwahati.
Tips to improve credit score:
If your credit score is poor, all is not lost yet. There are ways for you to shore it up before you apply for a loan.
- Think well before you take loans: Your credit worth is low when your assets to debts ratio is not favourable to you, that is, you have too many debts and they are disproportionate to your net worth. Avoid taking loans for frivolous things and especially avoid extravagant ones for non- critical reasons.
- Pay attention to your credit card expenses: One of the biggest problem areas for Indian consumers, credit card debt can ruin your life before you realize it. When you fail to pay your credit card bills on time, not only does the penalizing interest keep adding up, it also reflects very poorly on your credit score. If you have a credit card, use it sparingly and pay back the sum spent as soon as you get your statement.
- Don’t let debts get overdue: An unpaid EMI, a loan that is only partially paid and then forgotten- these are the things that can drastically reduce your credit score. A simple way to keep your credit score high is to ensure that none of your loans are left unpaid on time. Periodically check your liabilities to ensure that nothing is left overdue for repayment. Even small outstanding amounts can add up into large sums given enough time.
Conclusion:
Finally, keep track of your CIBIL score periodically too and check if the information it reflects is all correct. Sometimes, paid bills may not appear, a loan repaid and closed may be appearing as ongoing and all of these can quickly damage your credit score, making you seem like a poor credit risk. Checking the credit report and correcting it in time can avert this problem, before it affects you. If you are thinking to apply for a personal loan in Guwahati soon, check your CIBIL score right away and take steps to improve it before you start making applications to lenders.