जानिए वाहन ऋण के लिए अपना CIBIL स्कोर कैसे चेक करें?

The Credit Information Bureau (India) Limited (CIBIL), now TransUnion CIBIL, is one of the 4 credit information companies. It is licensed by the Reserve Bank of India to collect and maintain the credit information of borrowers. Banks pass on your debt information to TransUnion CIBIL, which then collates the data to form an indicator to measure your credit, i.e., the CIBIL score.

CIBIL score is an industry-wide used identifier to measure how consistently you have been able to pay your credit card bills or repay loans. The score ranges from 300 to 900, with 300 being low and indicating that you are not paying your dues on time. Generally, a score above 750 is considered a good one and is accepted by most financial institutions that offer car loans. Thus, you need a good CIBIL score for car loan approvals.

Why is CIBIL score important for car loans?

Like for any other loan, your credit score is the first stage where lenders decide whether they should approve the loan or not. Here’s why having a good credit score for a car loan matters:

• Proves your creditworthiness:

Your credit score is based on your ability to repay debts. If you have been paying your dues on time, your credit score will be high. However, if you frequently delay or miss payments, your credit score will be low, which is a bad sign in the eyes of the lenders. Yes, your car will be pledged as collateral, but lenders lending higher amounts of money cannot afford the risk of lending money to low credit score applicants. That does not go to say that having a low credit score will not get you a car loan. However, a good credit score makes things easier for the lender and expedites your approval process.

• Car loan amount:

Your car loan amount eligibility depends on your credit score and other factors, such as your monthly income. However, when you have a high credit score, you have the power to negotiate for a better deal. Often, lenders will offer a higher loan amount to retain quality customers. With a low CIBIL score, on what grounds can you bargain with the lender?

• Car loan interest rates

Like the loan amount, you can negotiate for a better interest rate if your credit history is spotless. Mostly, it would be at the cost of a steep interest rate and low loan amount if your credit score is poor.

How to check your CIBIL score?

You can check CIBIL score online as well as offline.

How to check CIBIL score online:

• Click on ‘Get Your Free CIBIL Score’ on the CIBIL website.
• Create an account using your PAN or Aadhaar card.
• You can opt for any of the paid plans to view your credit report or go ahead with the free subscription that only lets you see your CIBIL score.

How to check CIBIL score offline:

• Download the ‘Score Request Form’ from the CIBIL website.
• Fill in your name, mailing address, email address, mobile number, required ID proof copies and signature.
• Enclose the Demand Draft of INR 550 for CIBIL Score + Credit Information Report (CI or INR 164 for CIR.
• Mail the form to the below address:

TransUnion CIBIL Limited (Formerly: Credit Information Bureau (India) Limited)
One Indiabulls Centre, Tower 2A, 19th Floor,
Senapati Bapat Marg, Elphinstone Road,
Mumbai – 400013
You will receive your detailed CIR and CIBIL score in your mail.

Why is my CIBIL score low?

Let us say your monthly income increased and you decide to buy a car. You approach a car loan lender, but they 1) reject your application, or 2) offer you a very high interest rate. This is because your credit score is low, and here are the reasons why:

• Rejected car loans:

If you apply for a car loan and it gets rejected due to low credit score, your already low credit score may decrease even further. Therefore, if you apply for a second loan immediately, the lender’s hard inquiry can affect your CIBIL.

• Too many loan applications at once:

Applying for multiple car loans means multiple lenders requesting for your credit report. Multiple credit inquiries on your credit report are considered a high credit risk, resulting in a low credit score.

• Late repayments:

All your loans and credit card information are with CIBIL. Even if you make a payment, but it is late, it affects your credit score. Late payments indicate undisciplined financial management.

• Overdue credit cards:

Your credit card company will require you to pay the monthly minimum amount to avoid late fees, and the outstanding amount is overdue. If you roll over your dues constantly, your credit score will decrease.

• Failing to repay loans:

Defaulting on payments, too, lowers your credit score, indicating improper financial planning.

Minimum CIBIL score for car loan

While a good credit score is not set in stone, financial institutions will consider a score above 701 as good. Lenders will hold you in high regard if your score is above 750, making the initial stages of a loan approval smooth.

• A score above 750 will not only make you a favourable applicant, but also give you the power to negotiate for better interest rates and higher loan amounts.
• A score below 750 but above 701 may result in the lender approving your loan based on your monthly income and employer. The process, however, will not be as streamlined if your scores were higher.
• A score below 701* indicates poor creditworthiness. The chances of your car loan application being rejected are very high. Although, if the lender does agree to approve your loan, it will be at a steeper interest rate and lower loan amount.

Car loan for low CIBIL scores

While a higher credit score has its advantages, a lower credit score may sometimes get you a car loan approval. You can also have a zero CIBIL score, i.e., when you have not had any credit card bills or loans to repay. You can increase your chances of getting a car loan with a poor or zero CIBIL score with the following:

• Check employer tie-ups:

Corporations usually have tie-ups with leading banks for salary and business accounts. If you are an employee of such a company, the bank may offer better deals.

• Apply with a co-applicant:

If a family member has a good credit score, you can ask them to be the co-applicant.

• Check for other sources:

Non-banking finance companies (NBFCs), too, offer various types of loans. If you have a low CIBIL score, you might find it easier to get a loan from NBFCs. However, you may have to pay higher interest rates than the banks offer.

Remember that it is quite tough to get approvals on a car loan for CIBIL defaulters. In Bank of Baroda Cut-off on CIBIL score is stipulated at 701 for car Loan

How to improve credit scores?

Here are a few tips for getting your credit scores on the higher side:

• Timely repayment of debts:

Your credit score is built on how you pay repay debts, be it credit cards or loans. When you repay your debts on time, and there is no overdue, your credit score will gradually improve.

• Limit credit use:

Use a smaller percentage, say 25% to 30%, of your credit card limit. On the flip side, not using your credit card will negatively impact your score as to build a credit score, you need to take debts.

• Limit loan applications:

As we mentioned above, applying for multiple loans at a time makes you a credit hungry consumer, which lenders do not favour. Apply once; if the application is rejected, make sure to build your score back up, and apply again.

• Get access to your credit report:

A credit report from CIBIL comes with a paid subscription but viewing your credit report can help you improve your scores immensely. You can check areas of improvement and report errors.

Your credit score is the foremost factor that lenders consider while approving your car loan application. A bad credit score might get you a car loan, but at the cost of steep interest rates or lower loan amounts. Remember, lenders need assurance that you will pay them back, and a good credit score keeps you in their good books.

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