The Reserve Bank of India (RBI) has announced new rules to improve CIBIL scores that will take effect on April 26, 2024:
RBI has recently made 5 important rules which are basically on the side of customers and are going to benefit customers.
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| RBI's Recent Regulations to Elevate CIBIL Scores |
Rule 1: This rule is related to the cibil score where cibil score plays an important role in taking a loan or creating a cibil score according to the current loan. The first rule is that all banks and NBFC companies have to hire a nodal officer in their bank. Basically, the job of these nodal officers is to solve all kinds of complaints through an SPOC. That means single point of contacts will be available in every bank. It will not happen that you have any confusion related to loans or Cibil, any question, and you are roaming around here and there and you are not going to get any answer. Now, after April, every bank and every NBFC company will have a nodal officer where you can file an appeal and get information.
Rule 2 : RBI has issued this instruction to all banking and finance companies that in the coming time, if you ever check the Cibil score of any customer, then the customer will have to give the full information. For this, banking companies will notify customers via SMS and email and give them end-to-end information about what their credit score is, credit score, and its detailing.
Rule 3: RBI has guided all banks and NVFCs that if you reject any customer request in any situation, suppose you have applied for a loan or for finance, in any condition, if your loan is rejected or finance is rejected, then all its information will be given to you with a reason. You will be told the reason for your request to be rejected. It is not that they just rejected the request and told you that you will not be able to do it. No, if you can't do it for some reason, then they will provide you with full details through email and SMS.
Rule 4: According to rule number 4, RBI has guided all banks to create a link on their website on which the customer can check their Cibil score and credit history. Basically, this will have to be given once for free. Every NVFC, banking finance, credit bureau, company has to give a customer at least once in a year for free. You can request your bank to give you your credit history and you can review that credit history. And if you see any wrong entry anywhere, you can also file a complaint against that wrong entry and for this credit history check you don't have to pay any payment you don't have to pay any charges, once in a year it will be completely free.
Rule 5: The fifth and most important rule if for any reason your loan is going to be default or your credit history is going to be default then first of all you have to inform the banking companies in advance that if it is going to be defaulted from any reason then what is that reason and why it can be defaulted its notice will have to be done through SMS or email and when it is defaulted and its reporting has to be done by credit bureau or Cibil has to report it, then before reporting it, banking and finance companies and NVFCs have to inform the customers that your entry is being sent to the Cibil and this entry will be entered. And the most important rule number 6 in all of these
Rule 6: According to rule number 6, all banks or credit bureaus have to complete the complaints of the customers within 5 to 30 days. Yes, if you have any complaint regarding your Cibil score, your credit score and the bank does not solve it within the specified time, then it will have to pay a fine of Rs. 100 per day. The year of bank is set for 21 days and the bank will have to provide this information between 0 to 21 days. Whatever information is asked by the customer or if there is any complaint, then the complaint will have to be resolved. On the other hand, the time given for 9 days is given to the credit and the magician, like Cibil, that you can resolve your complaints within 9 days. If this time limit is not resolved, then the RBI will take action against them and will have to pay them a fine of Rs 100 per day. Since we are talking about the Cibil Score in this video, let's talk about the Credit Score and how to improve the credit score.
The best way to improve the credit score
improve the credit score is to pay from time. Payment should be done before the date of EMI time is set, you should pay from that EMI date or at least you should pay till that date. The second most important rule is that if you have taken any loan through credit card or have taken any balance on credit card then also make a timely payment. Apart from making that payment timely, try to never take more cash than required on a credit card than required. Don't take more loan than required. Now, what is more than required? Usually, according to CIBIL, i.e. credit score, usage is considered to be correct up to 20-30% If you are using between 20% and 30% then it's okay, people can use it. But if your utilization is going up to 50%, 60%, 80% then it's a warning bell.
Credit bureau thinks that you are not able to take your expense and that's why you are trying to spend with a credit card. Never pay a credit card according to the partial minimum due many people are like this 50,000 bill generated minimum due is only 4000 you paid 4000 and you think you paid timely bank will not give you information after that will not tell you but will take charges against it late fine will be applied plus it will be also included in the credit score that you are not making timely payments. And due to this, your Cibil score will be damaged. So, it is better to make full payments and make timely payments. And the fifth important point is never to settle a bank loan. If you think that you already have money and you want to close it.
Then first of all, make a part payment and bring it to the minimum amount. For example, if you have taken a loan of 10 lakhs, if you have received money from someone, 8 lakhs, 9 lakhs, 10 lakhs have come, instead of doing the full payment, make a part payment and do the part payment in such a way that the loan amount is reduced to the range of 10,000-20,000. It should come so low that if you want to do foreclosure in the future, then hardly 100-200 rupees will be impacted. And if you don't want to foreclosure, you don't want to do foreclosure, you want to keep it continuous, then hardly your monthly EMI will be 100-200-400 rupees. That means the benefit of this will be that you have finished the loan by doing part payment. But because of the 10,000-20,000 rupees you have kept, you regularly, you are paying it monthly, this money is going on time, so your credit score will go up and down and will go to the green zone.
Now what is this green zone? of CIBIL
Basically, the range of the credit score is up to maximum 900 points. The score above 800-850 is considered excellent. Usually, the range from 740 to 850 is considered in the range of very good. If you are in the zone between 700 and 800 then you are in the very good zone. If you are above 800 then you are in the excellent zone. If your score is below 700 or 740 then you are in the range of 650. So this is in the range of good. You are not very good but you are good. It is okay that you are managing. If your credit score is between 580 to 670, then it is okay. It comes in the average category. That you are able to manage your work. This good score is basically not considered. It is considered an average score. And for any reason, if your cibil score is below 580, then it will be considered poor now why these are bad, how we will do good, we have already discussed now why these are bad
Why your Cibil score falls
let's talk about 5-6 rules first rule, do not do timely payment, as we have discussed earlier that if you do it in time then your score will increase means if you do not do it in time then your score will increase means if you will not pay from time then your score will decrease second important is to take loan more than the limit limit should be between 20-30% third important thing due to which Cibil score or credit score gets spoiled that is being a loan EMI defaulter if you have monthly EMI of something and if you don't pay it timely then it is fine but you are not paying for many months 2 months, 3 months, 4 months, 6 months, 8 months you are not paying for something, then it is okay, but you are not paying for many months. If you are not paying for 2 months, 3 months, 4 months, 6 months, 8 months, then you are a defaulter. If you are not paying continuously, then your Cibil score will fall very fast. And the fifth and most important point is to check your credit history again and again. You give an application to check in a bank or NVFC company again and again. That check my Cibil, Cibil and credit score.
If you are checking credit score again and again, then banks come to know that you are reaching out to multiple organizations at the same time to collect money. It is possible that at the same time you collect a lot of money from multiple organizations and get into a ruff. Actually, this is considered negative. So if you want to take a loan, then first find check in one bank where you think you can get it. Let it be closer, you got it, it's good. If you didn't get it, then you apply elsewhere. But at the same time, don't check your Cibil score from 2-4 different companies every month. Because this will ruin your Cibil score. So, these were the important points by which you can improve your Cibil score. Before that, we have already known that what are the new rules of RBI due to which your Cibil score will not be impacted. Along with that, to make your credit score better, banks will help you.
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