CIBIL Score for Car Loan: TransUnion Credit Information Bureau India Limited’s mission is to collect information from credit institutions around the country, such as banks and non-banking financial firms (NBFCs). This information is used by the organisation to generate Credit Information Reports (CIR) for borrowers, such as the CIBIL report. Your CIBIL report is prepared based on how you handle credit cards and loans. Not only that, but your CIBIL score, which ranges from 300 to 900, demonstrates how well you have handled prior credit. Your CIBIL score must be at least 750 in order for your auto loan to be authorised.
Let’s checkout the reasons for low CIBIL Score for Car Loan
Improper financial management
Failure to make payments on any line of credit, such as a credit card, loans, or overdrafts, etc., also constitutes poor financial management, which lowers credit scores.
Loans turned down
If a car loan is rejected and another one is applied for quickly after the first, the second loan is similarly likely to be rejected, resulting in poorer credit scores.
There are far too many vehicle loan applications
When a customer applies for car financing to many financial companies at the same time, they all end up asking the customer’s CIBIL details at the same time. This is seen negatively and contributes to lower credit scores.
Due to the late payments
If payments on credit cards or loans are consistently late, it lowers credit ratings since it indicates poor financial management.
Overdue credit cards
Even though credit card companies simply require a monthly minimum payment to avoid late fees, the total amount outstanding is still deemed overdue. Rolling over dues by paying only the minimum amount consistently reduces CIBIL scores.
Here’s how you can improve the CIBIL Score
You must create reminders to pay your EMIs on time and avoid missing the deadline. It is suggested to keep previous credit cards in order to build your credit history. Make sure to pay off all of your EMIs and credit card obligations. Loans with a longer repayment period are preferable. Once a year, review your CIBIL report and score. A credit utilisation ratio of more than 30% is not recommended because it impacts your chances of future credit as well as favourable personal loan rates of interest.
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