Credit Information Bureau India Limited i.e. CIBIL score tells you how trustworthy you are in terms of money. A company named ‘TransUnion CIBIL’ is the oldest company in India which gives a number between 300 to 900 after looking at your loan and bill repayment records. This number decides whether you will get the loan or not. In such a situation, you must know such methods by which you can keep your CIBIL score correct.
Your score decides how easily you will get the loan. If your score is between 300 to 549 then it is considered very bad and it is almost impossible to get a loan in this situation. Whereas the score between 550 to 649 falls in the bad category where the chances of getting a loan are very less. If the score is between 650 to 749 then it is considered fair. Although in this situation you get the loan, the bank may charge a little more interest. The best situation is when your score is between 750 to 900 because on this score the loan is available very easily and at a low interest rate.
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effect of bad score
Whenever a loan is sought from a bank or non-banking financial company (NBFC), the credit score is checked first. Banks refuse to give loans if the score is low. If we talk about home loan, if the score is less than 500, the application gets immediately rejected. Even if a loan is somehow available, banks consider it risky and charge very high interest. This means that for a loan for which a person with a good score has to pay 9% interest, a person with a bad score may have to pay 15% or more interest. Apart from this, banks also reduce the time to repay the loan i.e. Equated Monthly Installment (EMI), due to which the amount of installment to be paid every month increases further and the burden on the borrower becomes more.
Impact on home and insurance
Now not only banks but also insurance companies, Financial Technology (FinTech) and BPO Business Process Outsourcing (BPO) that do call center or data work also check your score before giving you a job. In big cities like Delhi, Mumbai, landlords also ask for your score before renting out the house. If you have a bad score, you either don’t get the house or you have to pay a lot of security money. Besides, insurance premium also becomes expensive.
The adverse effect of any EMI delay remains on the credit report for 7 years. If the installment is late even by just 30 days then the score can fall to 100 marks. Apart from this, applying for loan in many banks simultaneously is also a big mistake. Every time the bank checks the report, there is a ‘hard inquiry’ due to which the score drops by 10 to 15 marks and this record remains visible in the report for 2 years.
New rules of RBI
The Reserve Bank of India (RBI) has made major changes in 2025 considering the problems of the common people. First time loan takers, also known as ‘new-to-credit’, no longer need to worry about their credit score to get a loan. Apart from this, the rules for updating credit score have also been expedited. Earlier this score was updated only once a month but now it is updated on the 15th and last day of every month. From July 1, 2026, this facility will be further improved and the score will be updated every week so that the improvement can be seen quickly. Along with this, RBI has given another big relief that now banks cannot charge interest on penalty. Earlier, banks used to charge interest on the fine as well, which increased the debt burden, but now banks can charge only a fixed fine.
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Easy ways to improve score
First of all, always pay your EMI and credit card bills on time because this forms the biggest part of your score. Secondly, do not use more than 30% of the credit card limit because spending more is not considered right. The third thing is that do not visit many banks for loan again and again because this reduces the score further. Check your credit report yourself at least once a year. If there is any mistake on the part of the bank, then get it rectified by complaining at the right time.
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