Quick Business Loan: Follow Tips To Enhance CIBIL Score

A high CIBIL Score is an important business loan eligibility that the borrowers are required to fulfil to be eligible for a small business loan. The C

A high CIBIL Score is an important business loan eligibility that the borrowers are required to fulfil to be eligible for a small business loan. The CIBIL score essentially signifies the borrower’s creditworthiness numerically. It is a 3-digit number which stands between 300 and 900. The best CIBIL score for a business loan is said to be more than 650.

A good CIBIL score lowers down the risk factor for the lenders. Noteworthy, high CIBIL score also enables you to avail a business loan at low interest rates. Now, the important factor to keep in mind is that the CIBIL score changes frequently. It is affected by a number of factors, such as the previous loans availed by you or the repayment track.

Said that, these factors can bring your CIBIL score down which can lead to the business loan application rejected by the lender. And, when you find your business loan application rejected, it is most likely because of a low CIBIL score.

Quick Business Loan Follow Tips To Enhance CIBIL Score

Take a brief idea about how to enhance CIBIL score for a quick loan approval.

#Tip 1: Repayment History

The repayment history is an important factor and it can bring down or shoot up your CIBIL score significantly. It tells a lot about you as a borrower to the lender.

The timely repayment history showcases your responsible behaviour. For a good CIBIL score, you are advised to make the payment of your bills at least 5 days prior to the due date. And, if you wish to pay via cheque, you are advised to submit the cheque at least 7-8 days before the due date since it takes a couple of days in the clearing.

#Tip 2: Applying to many Lending Institutions

Applying for a business loan to a number of lenders simultaneously is another mistake that the borrowers often commit. For your every business loan application, the lender checks your CIBIL score. The number of times your CIBIL score is checked signifies your credit hungry behaviour. In all, applying for too many business loans can negatively impact your credit score.

It is advisable to apply for another business loan at least 3-4 weeks after your previous loan application is rejected. With that, you are also advised to look for the reason why the application was rejected in the first place and apply for another loan only after improving on that point.

#Tip 3: Incorrect Information in the Credit Report

There are many times when some wrong information is entered in the Credit report which brings down the credit score. This has happened with a number of people. So, it is advisable to track of the CIBIL score and look for inaccuracies, if there are any. You can track your CIBIL score online once or twice every month and look for inaccuracy.

If there is any wrong information entered in your report, you can get it corrected through the TransUnion CIBIL or bank.

#Tip 4: Using a Cedit Card above 50% of the limit

It is always advisable to keep your credit utilization ratio below 50% of the limit. Also, if you are using multiple credit cards, make sure that their combined usage is below 50%. The limitless usage of the credit card shows your credit hungry behaviour—you are always in need of credit and you pay a major portion of salary to pay the card bill.

Also, if the most of your income is spent paying the credit card bill, it is most likely for the lender to think that how you will repay the loan. You are also advised to not to apply for multiple credit cards and keep the old credit card active. The old card will show your good history of repaying the card bill on time. Also, the older your card is, higher would be your CIBIL score.

With these easy to follow tips to improve CIBIL score, you can ensure that your score is always more than the minimum CIBIL score for a business loan. Additionally, there are many online lending companies and NBFCs which have their own credit evaluation process. They employ this process to evaluate the creditworthiness of the borrower in a holistic fashion, in addition to the CIBIL score. You can opt to apply for a business loan from them.