How Can I Improve My CIBIL Score To Get A Business Loan?
There are many factors that affect the cibil score. First focus on to understand the factors that affect your cibil score and take appropriate take measure to improve it. Read to know in detail.
Increasing revenue and profits are essential for the survival of a business in today’s competitive environment. Whether a company is starting up or funding operations, capital is crucial. If you lack the funds to invest in your venture, a business loan can be a lifesaver.
However, if you apply for a business loan, the lender will check your business's Corporate Credit Rating (CCR) and your CIBIL score to evaluate your creditworthiness. This blog will explain how to improve your CIBIL score to get a business loan.
Why Is Your CIBIL Score Important?Lenders heavily rely on the CIBIL credit score to assess your creditworthiness. A higher credit score indicates that you have a good credit history, and your loan application is likely to be approved. Low scores indicate that you cannot pay your debts, which makes it very unlikely that your business loan will be approved.
How To Improve Your CIBIL Score For A Business Loan?
Pay Your Dues On TimeYour credit repayment history is the most influential factor that affects your CIBIL score. As a result, paying off your credit card bills and loan EMIs on time can boost your CIBIL score. Delayed payments can, however, harm your credit score.
Regularly Review Your Credit ReportsMaintaining a good understanding of your credit report and keeping track of your active and closed loan accounts is essential. If you notice any error in your score, report it immediately to CIBIL.
Avoid Frequent Loan/Credit Card ApplicationsWhen you apply for a loan/credit card, the lender requests your credit report and score from CIBIL. These requests are hard inquiries, and they negatively affect your credit score. Therefore, you should avoid applying for too many credit cards or loans in a short period.
Maintain Low Credit UtilizationTo maintain good financial behaviour, you should avoid exhausting your credit card's credit limit. According to CIBIL experts, you should keep your credit utilization ratio below 30%. This way, you can demonstrate your desire to save rather than spend too much. You will improve your CIBIL score as a result.
Maintain A Good Credit MixCredit profiles with a healthy mix of secured and unsecured loans represent your repayment ability with both types of loans, which makes you more creditworthy. Home and auto loans are secured, whereas personal loans are generally unsecured types of loans.
A good CIBIL score also enhances your chances of getting the best deals and lowest loan interest rates. Follow the tips above to keep your credit score high.
Frequently Asked Questions
Q1. What is a good CIBIL score?
Ans. CIBIL scores above 750 are generally considered good.
Q2. How do you correct errors in your CIBIL report?
Ans. Contact CIBIL at firstname.lastname@example.org if you notice errors in your credit report. When the bureau receives your request, it will verify it and correct any errors.
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