If you are planning to apply for a credit card or a loan, then the first question you might be asked is, “What is your CIBIL score?”. CIBIL (Central Credit Information Bureau India Limited)  issues a score every year to rate the ‘credit-worthiness’ of an individual. It is a three digit number ranging from 300-900. Anything above 750 is considered to be a good score. CIBIL issues a credit report which contains a person’s loans and payment history across credit institutions over a period of time. A credit information report or CIR does not contain information about savings, fixed deposits and investments. 

So, what does a CIR contain?

In addition to a CIBIL score, the CIR also contains the following information:

1. Personal information: This contains your name, date of birth, gender,  income tax number and passport number. 

2. Contact details: Your address and telephone number is present here. You can add up to four addresses. 

3. Employment details: All monthly, quarterly and annual income from all your accounts from different banks and financial institutions. 

4. All account information: This section contains all your credit information. Information about all your lenders, credit limit, types of credit loans (house loan, car loan, insurance etc), payment dues, payment dates, current account balance and monthly record of your payments. 

5. Enquiries: Banks and financial institutions access your CIR, every time you create a loan. All access information recorded as ‘enquiries’ and the same can be accessed anytime. 

So, what are the benefits of a high CIBIL score?

Achieving and maintaining a high CIBIL score can help you enjoy a number of advantages.

1. Get loans approved easily
A high CIBIL score indicates that you are someone who pays his/her dues on time. You are a responsible borrower who will not falter on loan payments. In short, you’re a very ‘credit-worthy’ individual! If you apply for a loan with a bank and you have a high CIBIL score, then they will most likely approve your request since you have a history of being reliable with your payments. This is one of the most significant benefits of a high CIBIL score

2. Low-interest personal loans
Even if a bank approves a loan request with a low CIBIL score, they might issue a high interest rate to compensate for it. You become eligible for much lower interest rates when you take a personal loan and you have a high CIBIL score. This can help you save more money in the long run on your loan repayments. You can also get a discount on loan processing fees and other such supporting expenses.

3. Faster loan approvals 
Creditors don’t have to spend too much time on detailed background checks when they see a borrower with a high credit score. They trust you and don’t undergo the hassle to peruse all documents unnecessarily

4. High credit card limit
Your credit card limit is the maximum expenses you can make on your credit card. One of the benefits of a high CIBIL score is that the higher your score, the higher your credit card limit. This is because your disciplined financial behaviour gives credit card companies greater assurance that you will repay your bills, even if it is a high amount. 

How can you improve your CIBIL score?
If you are wondering how to improve your CIBIL score, the following steps can help you see a significant increase in your current score.

1. Pay your dues on time 
Have you been irregular with your payments when you purchase products through EMI? Or have you defaulted on credit loans? All of this can bring down your CIBIL score. You need to get organised and start paying your dues one at a time if you want to increase your CIBIL score.  Paying dues regularly shows that you’re a prudent borrower. It can significantly increase your credit score. Furthermore, delayed due payments come with penalties. So, you not only have to pay your dues but also the extra fines! This can prevent you from saving money on payments.

2. Don’t go on a loan spree
Don’t take too many loans at a time, you’ll find yourself trapped in a debt circle. To keep your CIBIL score from plummeting, repay one loan at a time, instead of repaying several loans simultaneously. Creditors keep track of these things. Multiple loans in a single loan period is a big red flag for lenders.

3. A balanced credit mix
Your loans must consist of both secured and unsecured loans. Secured loans include home loans, auto loans etc. Personal loans and credit card loans fall under unsecured loans (because you’re not offering up anything as security). Having a mix of both types of loans can increase your CIBIL score. 

4. Apply for credit within limit
When you apply for new credit, make sure it’s within your credit limit. Occasionally it’s okay to exceed your credit limit for important purchases or emergencies, but for other everyday occasions, maintaining a healthy credit limit ensures that you’re able to repay your loans well within deadlines. 

5. Keep reviewing your credit history
Study your credit report (CIR) regularly. Look for any red flags or inconsistencies. CIBIL may also make some mistakes in uploading correct information about your credit transactions. You may not even realise these errors which are bringing your score down. So make sure you find these irregularities well in time and report them to CIBIL, so that they can be corrected. 

6. Don’t throw away or discard your credit cards
Upgrading your credit cards to one which has a higher limit is normal. But throwing away the old one, oddly enough can also reduce your CIBIL score. CIBIL sees card disposal as a sign of inability to handle credit card payments. The number as well as the type of credit line transactions affect the overall credit score of an individual. 

Can you get a loan with a low CIBIL score?
Building a credit score takes time and effort, it’s not something which happens overnight. You need to follow all of the above to get a good score above 750, which can take a very long time. As a result of this, people end up delaying purchasing things they desire – new electronics, vacations, furniture etc. But is there a way to get access to EMI and credit with a low CIBIL score or no CIBIL score at all ? Yes!  ZestMoney makes this happen. With Zest, all you have to do is sign up on the website, upload your KYC details and then wait for Zest to assign you a credit limit. You can then use Zest credit to shop across partner websites

Your CIBIL score is one of the most important factors to keep a track of when you’re applying for a loan. However, with ZestMoney, you still have many no-cost EMI options open to you even if you have a low CIBIL score. Sign up now and get started!