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written by | March 21, 2022

Everything You Need to Know About CIBIL Score -1

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Having a CIBIL Score - 1 can make obtaining a loan or credit card challenging. You may have difficulty getting a loan, but some financial companies will approve your application even with a default CIBIL score. You should learn more about the reasons for this low score before you apply for a loan. A CIBIL score 0 means you have no credit history. For further information, please keep reading. 

What Is the CIBIL Score?

For individuals who are new to the world of credit, the question of ‘What is meant by CIBIL Score?’ is likely to be confusing. The short answer is that it is a numeric score indicating your creditworthiness. 

 Your CIBIL score ranges from 300 to 900. A higher score will mean more access to loans and increased loan limits. A high score can also mean fast approval for apartments or rental houses. Additionally, a high score will help you obtain the best car insurance rates. You will pay less for your car insurance than a person with a low credit score. The CIBIL code is based on the amount of credit you have, and the ratio of your outstanding debts to your available credit is a significant component.While you can always increase your limit, you should always pay more than you owe on your credit cards. Applying for new credit cards will also help you improve your score, and another way to lower your credit utilisation is to make more cash or debit card purchases. The CIBIL Score is generated by an algorithm that evaluates many data points and micro-credit trends. The algorithm considers four primary factors:  

  • Payment history
  • Credit mix
  • Credit enquiries
  • Depth of credit

This CIBIL score is a summarisation of your credit information, including transaction history on your credit cards, a long-term trend of your outstanding balances, and the ratio of actual repayments to a total amount owed. If you have a high score, your interest rates are lower than the average.

How to Log Into the CIBIL System?

In CIBIL, the information is checked on several parameters before disbursing money to you. 

  • To start using the CIBIL system, you must first create an account on the official website. Once you've done that, you can upload your documents. These documents include bills and identity proofs. 
  • You must monitor your credit score. Paying your bills on time and opting for deferred payments will help you maintain a good score. 
  • Likewise, you can improve your CIBIL score by being vigilant with your financial practices and ensuring your CIBIL means staying at a high point.
  • Once you've created your account, you'll need to upload all relevant documents. These documents include bills and identity proofs. 
  • You can also keep track of your credit score by making timely payments on all of your loans and credit cards. 
  • If your credit score is low, you can opt for informal borrowing to get the funds you need. By being smart about your financial habits, you'll soon be able to access funds according to your terms.

Also Read: Cibil Registration & Login Process Explained: Step by Step Guide

Impact of CIBIL Score in India

The CIBIL Score in India is a three-digit number that showcases a consumer's creditworthiness. Many lenders in India check this score to determine whether they are a reasonable risk for the lender and attract investment.TransUnion CIBIL Limited (CIBIL) is one of the leading credit information companies in the country, with the most extensive collection of consumer credit data. 

  • Credit scoring is an integral part of our financial lives, and it is vital to understand how a CIBIL score can affect you. 
  • A credit score is a three-digit number that reflects your creditworthiness. It ranges from 300 to 900. 
  • The higher the score, the more creditworthy you are. Banks generally prefer to extend credit to people who have an excellent CIBIL score. The resulting credit report contains information about your borrowing history and repayment habits.
  • Lenders base their decision on this number. A CIBIL score can range anywhere from 300 to 900. 
  • You will have more favourable loan and credit card deals if you have a higher score. A CIBIL score of 750 or higher will make a person more attractive to lenders. You may have heard of CIBIL, but you may not know what it means. 

CIBIL Score and Loan Approval in India

The CIBIL Score in India plays an essential role in the approval process of a home loan, and it helps lenders determine your repayment capacity. With a high score, you may be eligible for hassle-free loan processing and fast fund disbursement. Also, you may qualify for pre-approved loan offers from banks and other lending institutions. Therefore, before you apply for a home loan, check your CIBIL score. 

  • Your credit score is important to lenders, and they do not want to give money to borrowers who will default on their loan payments. 
  • If you have a high CIBIL score, multiple lenders are likely to offer you a loan. A good score can help you obtain 80% of the total cost of a property.
  • A good score gives you access to credit, while a low score makes it difficult. A high score gives you choices and gives you more options when applying for a loan.
  • The CIBIL report includes vital information about your credit history. 
  • A high credit score indicates a clean history, essential to lenders.
  • If you have a good credit score, it can help you secure a loan. There are many benefits to having a good score.
  • If your score is below the minimum requirement, take the steps necessary to improve it. You can also limit the use of credit cards to less than 50% of the approved limit.

How to Get a Loan With a CIBIL Score of 0 To 1 

Applying for a loan despite a CIBIL score of 0 or 1 can be difficult, but don't give up. There are a few options for people with bad credit, and a soft credit application is an excellent way to raise your credit rating before a lender evaluates your application.Checking out national issuers' websites and obtaining a secured card can be a great way to improve your credit scores. Keep in mind these few intricacies.  

  • Having a CIBIL score of 0 or one will make it more difficult for you to get a loan from a mainstream lender. Even if you do have a positive credit score, it will be challenging to get the lowest interest rates for a loan. 
  • You'll have to look at subprime lenders and other options specialising in loans for people with bad credit. These types of lenders will offer you 0% financing loans, which maximise the amount of existing credit.
  • If your score is low enough, it's possible to obtain a personal loan, but don't expect it to be easy. Generally, you'll have to use a soft credit application. You'll know your chances of getting approved and what you can expect for interest rates by doing this.
  • You can also use the soft credit application process to apply for a loan. It will help you determine the chances of being accepted for a loan. Once you've decided to use the soft application, you can ask for a lower credit limit and pay less interest. You may be surprised by the response you get, and you'll have more flexibility than you might think! 

Also read: List of KYC documents for CIBIL Report & Company Credit Rank

Loan Repayment Can Influence Your CIBIL Score

Your CIBIL score is calculated based on your repayment history, behaviour, and credit limit in India. If you've had trouble making payments, your credit score will probably be lower than the average. However, a single delay will not affect your CIBIL score if you make a timely and consistent payment history. Your CIBIL score is based on these factors, so make sure to keep your payment history up-to-date. 

  • Keeping a good credit score is essential if you want to avail of loans in India. Lenders use the CIBIL score as a guide to assess your creditworthiness. If your credit score goes down, lenders will be less willing to lend you money.
  • Late payments can negatively impact your score. You should monitor your credit history regularly. 
  • Keep the number of loans low and the amount of debt low. If you share a joint account, make sure you monitor the performance monthly. 
  • If there's a missed payment, it could lower your CIBIL score. It may take a long time to repair your credit report if you make payments late or skip them altogether.
  • A single delay will not have a significant impact on your score, but a few missed payments can result in a substantial drop in your credit history.

Conclusion

This article discussed what a CIBIL score of 0 and 1 means. CIBIL scores have a significant effect, especially on Individuals with such scores who find it difficult to apply for loans. However, there are still ways to apply for loans, as we have mentioned above. We also discussed how loan repayments could help you improve your CIBIL score.Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: Is it possible for CIBIL to have incorrect information about a person?

Ans:

While CIBIL can't have inaccurate information about a person, there are steps that a person can take to fix the data. 

  • The first step is to check the CIBIL status of the account. If there are any red flags, customers should contact the company to challenge the error. 
  • The CIBIL website provides a dispute resolution process. The account status will show the date it was last paid and how many days the account has been past due. 
  • If the account has a status other than X or 0 in CIBIL, they should be cautious. This may be an honest mistake made by the reporting company.

Q: What are the significant factors that negatively affect the CIBIL score 1?

Ans:

A CIBIL score 1 to 5 is given to you by the credit bureau TransUnion. The number reflects several factors. The payment history is the most significant factor. 30-day delinquency can reduce your score by 100 points. Therefore, you should make sure to make all payments on time. You should also set up reminders for your credit cards and loans. If you are late on a payment, it will negatively reflect your score. Similarly, if you have a lot of overdue accounts, it will reflect negatively on your credit rating.

Q: What does CIBIL score 1 mean?

Ans:

A CIBIL score is a three-digit number that represents a person's creditworthiness. A higher credit score increases a person's borrowing power, allowing them to access loans pre-approved for them. A good CIBIL score also makes it easier to get approved for rental apartments and houses and help a person get the best car insurance rate. People with a good CIBIL rating pay less for car insurance than people with low scores.

Q: Is it true that employers look at CIBIL scores these days?

Ans:

Your CIBIL score can slow down your job search if you have a low one. If you have too many open or delinquent accounts, it can raise suspicions about your financial stability. If you have too many credit cards, you may have a higher risk of being charged off with money laundering. This information is not helpful for a potential employer, but it can help you find a better job.

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The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.