Credit Score: You need to have taken a loan to have a CIBIL score – Here is why

Updated: June 19, 2018 12:16 AM

If you have never had a loan account or credit card, you do not have a credit history and hence a CIBIL score. While you could always go ahead and apply for a home loan, this would probably not be the best time to do so.

home loan, cibil score, credit card, credit information report, credit historyIf you have never had a loan account or credit card, you do not have a credit history and hence a CIBIL score. While you could always go ahead and apply for a home loan, this would probably not be the best time to do so.

I have never taken any kind of loan. In such a case, will my credit score be good to apply for a home loan now?
– Aditya Ranjan

If you have never had a loan account or credit card, you do not have a credit history and hence a CIBIL score. While you could always go ahead and apply for a home loan, this would probably not be the best time to do so. Instead, you should first work towards building a positive credit history by doing one of the following:
* Start with a consumer durable loan– a loan taken to purchase a mobile phone or TV on installments—and repay promptly.
* Apply for a credit card from the bank which holds your salary account. Since you are an existing customer, it will be easier for you to get a credit card. Now, focus on making timely payments to create your positive credit footprint.
* Apply for a secured card– a credit card which is issued against a fixed deposit you place with the lender. This protects the lender and helps you build a CIBIL score. You will have a credit score after six months of credit activity.

How do I get a get a perfect CIBIL credit score of 900?
—Harshil Singh

Your CIBIL score is a 3-digit numeric summary of the credit information report (CIR), based on your past credit behaviour and repayment history. The score ranges from 300 to 900; the higher the score, the better the chances of a loan being approved. While it is not possible to get a perfect 900, once you have a score of 750 or more, most lenders will lend to you as long as your income and current indebtedness can support additional payments. Lenders have different score requirements based on their risk appetite. You can work towards boosting your score through continuous prompt payments, patience and monitoring your credit profile with these steps: Always pay in full. Prompt, timely payments are a must. Maintain a healthy mix of secured (such as auto loan) and unsecured loans (such as personal loan, credit cards). Apply for new credit in moderation. Increased credit appetite may be viewed negatively by lenders. If you opt for co-signed, guaranteed and joint accounts, monitor these regularly to avoid negative impact to your score due to others’ negligence. Monitor your score and report regularly to track your score and apply for customised loan offers from select lenders, based on your eligibility.

Hrushikesh Mehta

The writer is vice-president & head, Direct to Consumer Interactive, TransUnion CIBIL. Send your queries to
fepersonalfinance@expressindia.com

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