Tips to Improve Your CIBIL Score Before Taking an Engineer Loan

Before opting for a loan to fulfil one’s financial requisites, there’s a fundamental question that needs an answer.

What are the primary criteria that financial institutions consider before granting credit to a prospect?

Specifically speaking, financial institutions look for one qualifying criterion, which in turn is, the creditworthiness of the applicant. The index of an applicant’s creditworthiness is his/her CIBIL Score.

Some lending institutions, like Bajaj Finserv, for instance, offer loans catering to specific requirements of individuals of a particular profession. One such profession-specific loan of this sort is an engineer loan. A loan of this kind is custom-made to suit financial requisites particular only to engineers.

Therefore, to avail such loans, engineers have to conform to the necessary compliance of keeping a satisfactory CIBIL Score. But before discussing credit ratings, one must also know why engineers might require a loan in the first place.

• Enhancing automation for boosting productivity

Engineers, who’ve moved into their entrepreneurial space, need equipment for increasing productivity of the business. Engineering, is one of the sectors, that is heavily dependent on automation, and thereby require equipment financing. In consequence, an engineer loan comes as a viable option for securing such finance and thus aiding automation.

• Initiation and expansion of businesses

While initiating a business requires capital, expansion of an existing business also needs considerable financial backing. Apart from that, an engineer loan also facilitates individuals to procure raw materials, and finance working capital requirements for running the business.

• Personal causes

Apart from funding reasons that are specific to their fields, engineers might as well require an engineer loan to fund their own expenses.

However, maintenance of a proper CIBIL Score is mandatory, notwithstanding the requirement that applicants might have. There are a few basic financial norms that applicants can adhere to, to maintain a minimum financial discipline.

1. Prudent use of existing credits

Applicants can follow a few directives that they can conform to while making use of their current credits.

• They must refrain from overusing their credit cards.
• Prospective applicants must also make sure, that they opt for more secured loans than going for unsecured loans.

2. Stay within a safe credit utilization limit

High creditworthiness offers stronger negotiability regarding interest rates. Particularly for loans that are intended for a specific purpose, like, engineer loans, this works as a significant advantage for applicants. A favourable engineer loan interest rate implies that engineers can get access to a more substantial amount for financing their entrepreneurship.

But for the interest rate to be favourable, engineers have to ensure that their existing credit utilization limit is an indicator of their financial prudence. In other words, staying within a safe boundary of credit usage implies they’re using just as much as they need. Ideally, a credit utilization ratio of 30% is deemed to be favourable.

3. Timely repayment of credit card and other existing dues

Engineers vying for engineer loans must keep within their repayment deadlines. Timely repayments indicate a high level of financial discipline. This, in turn, leads financers to gain confidence on the borrowers, since they’re ensured of proper repayments as well. Also, in consequence, timely repayments of credit card dues, and other loan instalments, also serve well to bolster one’s CIBIL Score.

And a high credit rating leads engineers to secure better loan terms at their end, particularly with respect to engineer loan interest rate.

4. Keeping regular tabs on credit ratings

To ensure consistent credit ratings, engineers must keep regular checks on their credit score. For a string application, it is advisable that CIBIL Scores remain higher than 750. In the course of monitoring one’s credit rating, CIBIL authorities must be reported to at once, if prospective applicants find a discrepancy.

Conforming to these basic hygiene norms becomes all the more important for a prospective applicant for an engineer loan. After all, a loan of this variant is unsecured, which is why lenders would require to have faith in the borrowers’ credibility.

A loan of this kind has various positives to it for the borrower. Simple documentation, an affordable engineer loan interest rate, and a very low disbursal turnaround time are only a few attributes of such loans. Apart from these, loans also provide prospects with opportunities to increase their domain knowledge and therefore boost their career.