Steps to check Credit eligibility when you have low score

Though there is no standard process to check Credit Eligibility in case of Low CIBIL Score. Reason being CIBIL Score calculation is as secretive as the secret recipe / formula of Coca Cola drink :). Still we can find out at macro level what is hurting our CIBIL Score and reason for Low CIBIL Score.

As a 1st step CIBIL report should be readily available. Please note that in most of the cases, banks only pull out CIBIL Score not CIBIL Report to check basic eligibility. Based on score only loan / credit card is approved or rejected. In case of Low CIBIL Score, application is rejected without going into further details. It is important to note that information available with Bank Executive is only limited to your 3 digit CIBIL numerical value i.e. CIBIL Score. But in order to show that they know everything they pass wrong information to customer regarding Low CIBIL Score which is unfortunate.

As a 2nd step, please check all accounts which are OPEN in CIBIL Report and note down corresponding credit limit or principal outstanding. In case of Credit cards, you should account total credit limit of credit card instead of credit limit utilized. Reason being, you can utilize upto 100% of credit card limit therefore it is assumed to be credit utilized or can be utilized by the customer. Sum total of all account will give current Credit Utilization. Assuming current credit utilization is 20 lakh.

Step 3: Now check your current annual income. Only consider net take home salary as reimbursement or bonus is not considered while fixing eligibility of any loan. Assuming net annual take home salary is 10 lakh.

Step 4: Multiple net annual take home salary with 4 and it is your credit eligibility i.e. 40 lakh. Now important point is that this multiplying factor of 4 is different for different people. 

Now from above calculation, the Home Loan eligibility of a person is 40 lakh minus 20 Lakh i.e. 20 Lakh. Assuming this person utilized overall 30 lakh credit limit instead of 20 lakh then his Home Loan application will be rejected.

Please note that this article has discussed only one of the factor which influence CIBIL Score. Credit Eligibility has strong co-relation with Low CIBIL Score. CIBIL Score is complex calculation and is dependent on multiple factors. A single factor can only influence to the extent weightage assigned by CIBIL to that particular factor. In this post we are assuming that an individual has never defaulted or delayed any payment. His Low CIBIL Score is only because of Credit eligibility issue.
Visit  www.cibilconsultants.com to cure your any finance related problem.