CIBIL score is an indicator of credit repayment compliance by a borrower, which is one of the basis banks or credit institutions decide to lend-especially to individual borrowers.
CIBIL is an approved credit rating agency. As clear from its original name-Credit Information Bureau India Limited- CIBIL gets reports of credit availed and repaid by a borrower. The information is pooled and analysed and tabulated with reference to the credit source and category. The lending by a credit institution is now linked to a master database sourced by the credit rating agencies like CIBIL.
A lending institution seeks credit rating on a prospective borrower from CIBIL gets the credit score and details of that prospective borrower. The lending institutions that have arrangement with CIBIL can directly access the same online. An individual also can get his CIBIL score (Please read the article in Indiastudychannel.com "How to Apply for Your Credit Score from CIBIL").
A score of 750 and above on scale of 900 is considered a good score. The higher the CIBIL score the higher the probability of getting a loan.
In the question there is no mention what is the CIBIL score. Lower CIBIL score means the lending has more risks to the bank/credit institution. However the lender will closely analyse the score and find what is the main risk. Then i other parameters are okay the lender may prescribe some 'risk mitigating measures' like suitable and sufficient collateral security, third party guarantee, undertaking from the employer , pledge of liquid securities etc.
How to improve CBIL score?
The parameters affecting credit score are:
1. Repayment history -Default or delay in repayment: So to improve credit score one has to be very regular in repayment of loans, paying the EMI on or before due date.
Those who are regular in repayment tend to get pre-sanctioned loan/credit card offers from banks.
2. Prudence in borrowings: One should not have too many borrowings. Too many credit cards, many loans etc show that the person is not a prudent borrower and can signal risk of over borrowing to a new lender. Hence if you are having to many loans, it is better to close a few or consolidate them to reduce number of loans or borrowings.
3. Category of borrowings: If the credit shows that the borrowings are of high interest rates, then that means the person is not able to command low interest borrowings and that signals risk. More personal loans and credit card borrowing is not seen as a good signal. But if the borrowings is a prudent mix of personal loans, housing loans and credit card with regular repayment and very prudent use of credit card then that is considered favourable.
To improve CIBIL score one should reduce overdrawing from credit card, pay credit card bills sufficiently before due date, and restrict borrowings well below the maximum credit allowed.
4. Percentage of EMI/repayment commitments to gross income: Usually banks prescribe that a person should have take home salary at least 50% of his salary earnings. That is the total of repayment/EMI should not be more than half of his gross salary. In this question, as the net take home pay is 28028, the repayment of all loans should also be about 28000/-. If more, then the borrower should convince the lender bank how he will manage his regular family and domestic expenses and to have a normal life.
Before going to borrow one should evaluate and ensure whether the borrowing is really needed, whether his income is sufficient to repay the monthly instalment regularly before due date, and whether he has a cushion to tide over unexpected emergencies like delay in salary etc.