If you know one thing about CIBIL score, then know that it's one of the most important factors to play a role in your applications for credit cards, personal loans, home loans, etc. So, if you have a low CIBIL score, then you can have a hard time getting credit in any form from a bank. However, can it affect your career too? Let’s find out.
Even though CIBIL score is mainly meant to assess someone's creditworthiness, i.e. how "worthy" they are of availing credit, lately, it's being used by recruiters for assessing a candidate’s general behavior. This trend is particularly observed in financial institutions such as banks and NBFCs.
The following are the two main reasons why recruiters have started to check the CIBIL report of every job applicant lately:
Employee frauds have risen sharply over the past couple of years. Thus, recruiters want to ascertain that the candidates they hire can be trusted a 100%.
Although background checks and verification of education and identification documents, etc. can greatly help in ensuring the authenticity of a particular candidate, their CIBIL report can also highlight any discrepancies in the details provided by them.
Your CIBIL score can also give a peek into your personality. This is because those who are responsible credit-users, i.e. pay their bills on time, use credit cards in moderation, and avoid “minimum payments”, etc. are likely to be responsible in general too. In other words, a recruiter would be fair to assume that the candidate can manage their time properly, submit the work on time, and also take responsibility for their actions rather than cut corners when their credit report looks good.
If you a poor CIBIL score, then there is no reason to worry. There are many ways to improve it over a short period, such as:
You must never take your CIBIL report at face value. This is because your bank may submit wrong information to the credit rating bureau which in turn hurts your score even when it’s not warranted. However, you can solve this problem by getting a copy of your report (you can easily apply for it through CIBIL’s official website) and marking the mistakes (if there are any). Then, you can contact your bank and urge them to have these corrected. If all goes well, your score should improve within a few weeks.
The one thing that hurts your score the most, is delays in EMI payments and credit card payments. In fact, even a single late payment can cause more damage than you can imagine.
If you want to increase CIBIL score, then make it a point to make the payments on time, every time. You can also enable the auto-debit feature in your bank account which allows the lender the deduct the EMI every month automatically. Otherwise, you can use a personal finance app which helps monitor your expenses and reminds about upcoming EMI payments, etc.
Is your credit score based on just a personal loan, home loan, or credit card? If your answer is "yes", then perhaps that’s the reason you have a low score. One of the most important things to do to achieve a high credit score is to increase the credit variety. So, if your credit history comprises of just a home loan, then you can get a small personal loan. Similarly, if it's based on just a personal loan, then you can get a credit card. These actions alone can greatly boost your score.
Credit cards have their uses, one of which is credit building. However, excessive usage can defeat their purpose and cause credit score damage. So, you must keep your credit utilization below 30%.
It’s important that you keep an eye on it and make improvements when you see it drop. In that regard, feel free to apply the techniques above. You are sure to notice the benefits.