CIBIL score is a three-digit number calculated based on your enquiries and account details. Banks and financial institutions provide your financial details to the Credit Information Company to provide you a rating, that is CIBIL Score. It usually ranges between 300 to 900. CIBIL scores plays very crucial role when you apply for any financial product. CIBIL score is one of the most important parameters a lender considers while assessing and evaluating your application for loans or credit cards.
You are no stranger to the fact that you need to maintain a good CIBIL score to have access to loans when you need them. It is just like maintaining your fitness profile, you must maintain you credit profile to make it look satisfactory to the lender. Banks and financial institutions assess your credit score while evaluating your loan application, higher your credit score the better chances you have in getting the loan approved. More than 750 CIBIL score is considered to be the good score to get the loan approval.
But it is not always mandatory that if you have CIBIL score then only you can get a loan. Few lenders are available out there to offer you loans, if you don’t have any credit history. That’s where we wanted you to have a bit of idea, if you are new to credit and don’t have a credit history then also you can apply for loans or credit cards and can get one.
Having a CIBIL Score -1
If you have no history (NH) of having any credit history or any track record that lender can see whilst providing you the loan, that indicates you have a CIBIL score -1 or can say NH (no history). There are situations in which one can have CIBIL -1(NH), we have curtailed them down to three reasons, as follows:-
- If there is no credit history or credit record in your name
- If there is no credit activity in for last 2 years or 24 months or your credit history is older than 24 months. That means you have closed your loan accounts or have not taken any financial product in last 2 years.
- In case, if you don’t have direct credit exposure on your name (for instance you are just using a add on credit card).
CIBIL score -1 or (NH) is not considered a bad situation to be in, if you are looking for a loan. There are banks and financial institutions who provides loan even if you are a new comer or borrower for credit. Few Banks & financial institutions who might reject your applications and don’t feel comfortable in lending if you don’t have a credit track record. As there is risk attached to the customer profile whether he will be able to repay the loan amount in the given timing or not, how will he mange his finances, etc.
But by reiterating the fact that its not a bad situation to be in, one has to start from some point in their life. You can anytime check your free CIBIL score report to see what is your CIBIL score and whether you would be able to get the required amount or not. It also helps you in keeping your credit records on track and you would be able to maintain it very easily. CIBIL report is a very detailed report, that enables you to keep tab on your loans and credits cards payments.
How to Build a Credit Score for First Time Borrower or New to Credit Borrower?
It’s very simple and hassle-free process to start building your credit score. It will take 6-month credit history to CIBIL to calculate your credit score.
To start with, it is better taking only one credit card rather than going for multiple credit cards. Build your credit history slowly and steadily, maintaining your payments on time without making any default in payments.
And it is better to keep your accounts open, closing them won’t do any harm but the credit bureaus are likely to drop the old and closed accounts from the CIBIL report. Also make sure you use your credit card responsibly, and use as not using it won’t help in building score anyway.