2 min read
25 May 2021

Your credit score forms a vital part of your financial profile. It is a 3-digit number assigned to you based on your history with credit or lack thereof. The score ranges between 300 and 900, with anything over 750 considered as ideal. In India, there are a handful of credit scoring agencies and among these, you’ll find that TransUnion CIBIL is the most popular. Thus your credit score is often called CIBIL score.

This score is taken into consideration whenever you apply for credit in any form, be it a loan or a credit card. Typically, having a low score adversely affects your chances of accessing credit on favourable terms or getting approved at all. In such an instance, learning how to improve credit score is a skill that comes in handy. This not only helps you secure funding, but may also allow you to get it on better, more pocket-friendly terms.

Now that you’re aware of its importance, take a look at the factors that affect it, how to improve CIBIL score, and how to get a loan with bad credit.

What Role Does CIBIL Score Play When Borrowing Credit?

Your CIBIL score plays a very important role when you’re borrowing credit of any form because it is indicative of your creditworthiness. Lenders analyse your score to assess your financial profile and gauge the risk you pose as a borrower. Having a low CIBIL score indicates a lack of experience with credit or improper credit management. This causes lenders to see you as a high risk, which may lead to an outright rejection.

On the other hand, maintaining a high CIBIL score means that you are consistent with payments and have sufficient experience handling different types of credit. All in all, your credit score is a key deciding factor and determines whether or not you get approved for credit.

How is CIBIL Score Calculated?

CIBIL score is calculated by assessing 4 major factors of your financial profile. They are as follows:

  • Credit utilisation ratio
  • Credit portfolio mix
  • Repayment track record
  • Amount of existing loans or credit

These factors carry different weightage: Your repayment track record has the highest at 30% and is followed closely by your credit portfolio mix, which makes up for 25%. Similarly, credit utilisation and the number of loans you have make up 25% of your score and other factors like the number of loans and applications comprise the balance 20%. Working on these areas specifically will almost guarantee you the score you desire as it minimises room for error.

How to Increase CIBIL Score?

Learning how to improve credit score is well worth the effort because a subpar score may secure you credit at unfavourable terms. Thankfully, there are a few quick measures you can use to fix a bad score. They are as follows:

  • Work towards clearing up all your outstanding debt: Unpaid dues can severely hurt your score and keep it from growing. Employ better financial management and pay off these dues as soon as possible.
  • Be consistent with repayments: Ensure that all your credit payments are on time. Missing even a single EMI or credit card bill can cause a dip in your score.
  • Check your CIBIL report for errors: Errors in your CIBIL report can keep your score from growing even if you’ve been a good borrower.
  • Keep your credit utilisation ratio minimal: Avoid utilising the entire limit available on your credit card. Maintaining a credit utilisation ratio under 35% is healthy and will help you see gains in your CIBIL score.

After learning about the worth of a good credit score you may be asking yourself, ‘How can I borrow money with bad credit?’ This is because certain measures stated above may take some time to put in place, and you may need a loan fast with bad credit in the present. Be careful when you are looking for online loans for bad credit, as sometimes, you may end up paying very high interest if you don’t choose the right lender.

How To Borrow Money With Bad Credit

In order to get a loan with bad credit, you can employ alternate measures like showing substantial financial backup or pledging an asset as collateral. The latter has a higher chance of success and secured borrowing options also offer larger sanctions along with better repayment terms.

Opt for the Bajaj Housing Finance Limited Loan Against Property by pledging any residential or commercial property that you own as security. This will help you get access to a sizable sanction of up to Rs. 10.50 crore*. Further, thanks to the lenient eligibility criteria, you can qualify for this loan even with a less than ideal CIBIL score, so long as other aspects of your finances are in good standing. You can also choose to repay over a flexible tenure up to 15 years and get access to your funds within 72 hours* of the approval.

Check your eligibility for a loan against property with bad CIBIL score, and to get quick access to funding, check your pre-approved offer. This will help you get a tailored deal and enjoy a hassle-free approval online.

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