You make a whole lot of savings and come to a position at some point of your life to fulfill your dream of car. You start searching out the lenders from whom you can get loan at affordable interest rates with reasonable repayment period. Also you look for minimum processing fee, prepayment charges, foreclosure charges, etc. Further, you see yourself fitting into the eligibility criteria, bringing smile on your face. After making all the calculations, you pick one lender and go there to file your car loan application. But to your utter dismay, your application gets rejected despite meeting the criteria of age, income, etc. You start scratching your hair to know as to what exactly went wrong with your car loan application. The most common reason would be your bad credit score that would have resulted from the negligence on your part. Such negligence are explained in the points below.
Reasons for bad credit score
Often the payments for credit cards and loans get delayed on a regular basis, making your credit score to fall drastically. So when you already have the credit card or any loan running on your account, make sure you keep your expenses in check so that you would be able to make payments for the same on time. This will help bolster your CIBIL score, a benchmark for checking the credit worthiness of an individual. Some people make credit card payment on the due date. But since the payment gets credited the next day, it is considered as late payment. This not only worsen your credit score but also imposes late payment charges. So, you need to make payment for credit cards 2-3 days before the due date.
Overdue credit cards
You can get away with late fees if you pay the minimum amount due on credit card, but the balance amount outstanding is viewed as overdue. Following the practice of paying only the minimum amount from time to time will lower your CIBIL score and thus nullify the possibility of your car loan application getting the nod from the bank.
If you keep defaulting on payment due on credit card, overdraft or any loan, then it creates a feel among the lenders that your financial management is not up to the mark and thus weakens your credit score. So ensure you manage your financial resources well to pay the dues of credit card and loan on time. This will boost your credit score and convince lenders to disburse car loan to you.
Too many car loan applications play spoilsport
Do not approach multiple lenders for car loan at the same time. This will weaken the credit score as all the lenders will be checking your CIBIL details at the same time. This is seen negatively and will work against your bid for car loan.
Rejected car loan
If you apply for a fresh car loan application immediately after the rejection of the previous one, then the second application could well be rejected. This will further weaken your CIBIL score.
After knowing the reasons for poor credit score, now put our mind on the process to view your CIBIL score.
Process to check your CIBIL score
- You can go online to check your credit information reports before you apply for car loan. You can check the fees for the same online.
- Login to the Wishfin website to apply for your credit score
- Furnish basic details like name, date of birth and identity proof
- Give relevant contact details
- Pay the fee and complete the process
- Subsequent to the completion of application process, CIBIL will will be in touch will you and provide you the credit score
Favourable CIBIL score for car loan
While you apply for car loan, you must ensure you have the CIBIL score of over 750, preferred by the banks. Even 600 is viewed good, but over 750 is ideal.