Does Applying for Credit Affects One's CIBIL Score?_WC

Banner-Dynamic-Scroll-CockpitMenu_HomeLoan

Does Applying for Credit Influence One’s Credit Score_WC

3 min 15 Mar 2023
Applying for Credit and Credit Score Influence
Highlights:
  • Here’s How Applying for Credit Influences One’s Credit Score
  • How to Check Your CIBIL Score for Free
  • Simple Ways to Improve Your CIBIL Score

An individual’s CIBIL score is a critical factor that determines whether they will get approved for a loan as well as the terms and conditions of the loan that will be offered to them. Thus, all borrowers are advised to perform a CIBIL score check before applying for a loan and initiate the loan application process only when their CIBIL score meets their lender’s eligibility requirements. A good CIBIL score is anything above 750. Such a credit score is the mark of a responsible credit user who can be trusted with timely loan repayment.

Several factors affect a person’s credit score, including their repayment history, the length of their credit history, the credit mix they have, hard enquiries, etc. In this article, we look at how applying for new credit affects a person’s credit score as well as how to check CIBIL score for free.

Here’s How Applying for Credit Influences One’s Credit Score

Over the last few years, be it a home or a car, more and more people have been opting for loans to fund their purchases. Loans allow borrowers to afford things by paying for them in a systematic and stress-free manner. However, one should not take too many loans. Here’s why.

Every time a borrower applies for a loan, the lender to whom they have made an application sends an enquiry to a credit information bureau regarding the borrower. All enquiries made by lenders get registered as hard enquiries. Too many hard enquiries show a person to be credit hungry and also negatively impact their credit rating. Information about all applications one has made for new credit, including those that met with rejection, stays on one’s credit report for many years. It is thus that borrowers are advised to apply for a loan or credit only when they absolutely need it.

Borrowers must check CIBIL score for home loan before beginning the loan application process. Let us look at how borrowers can check CIBIL score for free.

How to Check Your CIBIL Score for Free?

If you want the most accurate and detailed CIBIL report, we recommend going to the official website of TransUnion CIBIL and subscribing to a plan. Based on the plan you have selected, you will be required to pay a fee and once you do that, you will be able to see your CIBIL score. Further, TransUnion CIBIL will send you a detailed CIBIL report as well.

However, if you want to check CIBIL score for free, you can do so by going to one of the many websites that offer this facility. You will be required to provide your PAN card or aadhar card details to help the website identify your credit report. Further, you will also be required to provide some personal information, such as name, email address, etc. Please know that this information will be safe with the website with which you have shared it. So, you need not worry about a data breach or security issues.

Also Read: Steps to Check CIBIL Score for Free in India 

Let us now look at how can borrowers improve their CIBIL score.

Simple Ways to Improve Your CIBIL Score

If you are applying for a home loan or a loan of any kind, check your CIBIL score. Apply only if your CIBIL score is above 750. If it is less than 750, follow the tips mentioned below to improve your credit score before beginning the loan application process.

Your credit history makes up 35% of your credit score. In other words, it is one of the key factors that determine one's credit score. Therefore, borrowers who want to increase their CIBIL score must keep their credit history clean by paying EMIs and credit card bills on time. In case a borrower misses an EMI payment, they must repay it as soon as possible.

The length of one's credit history is another factor that determines one's credit score. The longer your credit history, the better your credit score. It is for this reason that borrowers must never close old loan accounts. Closing old loan accounts leads to borrowers losing their credit history, which in turn, causes their credit scores to go down.

Also Read: How to Check, Calculate, and Improve CIBIL Score? 

Yet another thing that you must do to increase your credit score is limit loan and credit card applications. Too many credit card and loan applications show a borrower to be credit hungry. Every time a borrower makes an application for a loan, the lender sends an enquiry to the borrower. This enquiry gets registered as a hard enquiry. Borrowers should keep hard enquiries to a minimum as these reduce a borrower's credit score.

Borrowers must also check their credit report from time to time for errors. Credit rating agencies assign a CIBIL score to borrowers based on the information passed to them by lenders. Sometimes, lenders pass on the wrong information to borrowers, which leads to a borrower's credit score going down. Borrowers must check their credit reports from time to time for mistakes and misinformation. If they see any errors, they must report them immediately as rectifying errors takes time.

Those borrowers who want to increase their credit rating must also maintain a healthy mix of secured and unsecured loans in their kitty. Maintaining a healthy mix helps lenders assess a borrower's ability to handle all kinds of credit.

Lastly, borrowers who want to improve and maintain a good CIBIL score must maintain a low credit utilization ratio. The credit Utilization ratio is the ratio of credit used to credit available. A high credit utilization ratio is the mark of an unreliable borrower. Borrowers must try and keep their credit utilization ratio below 30%. They must also try and clear their full credit card bill each month.

Final Words

Following these simple steps will certainly help you build a good credit score and strong financial strength, which is crucial to avail of a loan on good terms and conditions.

Blog-Intro-Disclaimer

DISCLAIMER:

While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.

Asset Publisher

Trending Articles
alt
home+loan Home Loan

[N][T][T][N][T]

Home Loan Burden Management: Five Tips
2022-06-27 | 3 min
alt
home+loan Home Loan

[N][T][T][N][T]

How to Calculate Home Loan EMIs
2022-06-14 | 5 Mins
alt
home+loan Home Loan

[N][T][T][N][T]

A Complete Guide for Home Loan Insurance
2023-04-03 | 4 min
alt
loan+against+property Loan Against Property

[N][T][T][N][T]

What Is the Difference Between Gold Loan and Loan Against Property?
2023-03-02 | 6 min
alt
loan+against+property Loan Against Property

[N][T][T][N][T]

Why Professional Loans Against Property Are Financially Beneficial?
2023-03-03 | 5 min
alt
loan+against+property Loan Against Property

[N][T][T][N][T]

What Are the Eligibility Criteria for Obtaining a Loan Against Property?
2023-03-28 | 4 min
alt
loan+against+property Loan Against Property

[N][T][T][N][T]

Top Benefits of a Loan Against Property Over Collateral-Free Loans
2023-03-02 | 6 min
alt
home+loan Home Loan

[N][T][T][N][T]

Benefits of a Home Loan
2023-02-20 | 4 min
alt
loan+against+property Loan Against Property

[N][T][T][N][T]

Understanding the Fees & Charges on Your Loan Against Property
2023-02-14 | 6 min
alt
home+loan Home Loan

[N][T][T][N][T]

How to Pay Off Your Home Loan Quicker
2022-06-29 | 6 Min
alt
loan+against+property Loan Against Property

[N][T][T][N][T]

Understanding the Fees and Charges on Your Loan Against Property
2023-02-16 | 8 min
alt
home+loan Home Loan

[N][T][T][N][T]

How to Choose the Best Home Loan?
2023-08-09 | 4 min
alt
home+loan Home Loan

[N][T][T][N][T]

Advantages for First-Time Home Buyers
2023-07-14 | 4 min
alt
loan+against+property Loan Against Property

[N][T][T][N][T]

5 Benefits of Using Area Conversion Calculator
2023-02-14 | 6 min
alt
loan+against+property Loan Against Property

[N][T][T][N][T]

Things to Do If Your Loan Against Property Application Gets Rejected
2023-02-14 | 5 min

MissedCall-CustomerRef-RHS-Card

RHS-insurance-ad-card

RHS Ads