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‌Everything you need to know about CIBIL score

What is a CIBIL Score?

In the year 2000, TransUnion CIBIL was incorporated as Credit Information Bureau of India Limited. This organization issues a score called a CIBIL score for a borrower. It is also known as credit score. This score denotes the creditworthiness of the borrower and his ability to repay the loan on time.

What is a good Credit Score?

A person who has a good Credit Score has the ability to repay the loan with interest on the given time to the bank. A Score is a three-digit number calculated on the basis of the financial history of the applicant. It ranges from 300 to 900. The higher the score the better chance of your loan being approved. 79% of the loans approved are for those who have a score of 750 or more, says CIBIL’s analysis.  Learn more. 

Factors affecting CIBIL score

The score is based on several factors. Such as your payment history, types of credit and number of loan accounts, guarantors on the loan, credit history, opening and outstanding loan amount, and so on. Different financial institutions have different regulations and benchmarks with respect to the score.

CIBIL score is like the first impression of the borrower for a financial institution. A person who manages his finances well will always have a higher score. A lower CIBIL signifies that the borrower has low creditworthiness and lenders refrain from giving loans to such applicants.

Advantages of a Good Credit Score

A high Credit Score leads to several advantages for a borrower. Here are a few key advantages:

1. Credit from Lenders

If an applicant has a good CIBIL score, he may get a loan from a financial institution with a lower interest rate and minimum documentation. However, if the CIBIL score of a candidate is low, the financial institution may reject his application for a loan or offer it at higher rates of interest.

2. Quick Approval

A high CIBIL score states that you have good creditworthiness. Also will repay your loan on time to the lender. Therefore, the financial institution will process your loan faster. The ones who have a low CIBIL Score may have to submit a number of documents and find guarantors making the loan disbursal process time-consuming.

3. Low-interest rate

Those who have a higher CIBIL, get a loan at a lower interest rate than the ones who have a lower one. This is because when one has a higher CIBIL score, the banks trust the borrower more than the ones who have a low one.

4. More Negotiation

For people who have a higher score, financial institutions will grant loans to them quickly and at a low-interest rate. Therefore, they get more negotiation authority to negotiate with the banks for a lower interest rate.

5. Higher Limit Loans

With a good CIBIL, you may get loans to the upper limit. Therefore, you should definitely do your CIBIL report check.

6. Easy Approval for Leased Properties

A good credit score assists us to get easy approval for loans even for rented or leased properties. Like commercial complexes, apartments, and so on.

7. Amazing Credit Card Offers

If you have a good score, you may also enjoy credit card offers from various banks. These cards generally have higher limits, more privileges, and amazing offers and cash-backs.

What is your CIBIL score? Check it out here.

To conclude

A CIBIL also known as Credit score is an important factor. Financial institutions, banks, and other agencies consider this when evaluating the creditworthiness of a person. The higher the credit score you have, the better it is for you. If a person has a low score, it means that he has not been able to pay his bills on time, or has a history of non-payment of bills. A person with a low score might not be able to get the best interest rates from a bank, or might not be able to get a loan at all.

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