What Is Cibil Score And Why It Matters
Planning on taking a loan? Looking for a loan at a lower interest rate? Then make sure your CIBIL score is good. At this stage you may have more questions like what is CIBIL?
The CIBIL score explained
The Credit Information Bureau (India) Limited (CIBIL) is the most popular of the four credit information companies licensed by Reserve Bank of India. There are three other companies also licensed by the RBI to function as credit information companies. They are Experian, Equifax and Highmark. However, the most popular credit score in India is the CIBIL score. Let’s find out what is CIBIL score.
CIBIL Score is a 3-digit numeric summary of your credit history, rating and report, and ranges from 300 to 900. The closer your score is to 900, the better your credit rating is.
What does credit history and credit report mean in CIBIL?
When you want a loan you must ask yourself what is my CIBIL score? And will I be credit-worthy? Your bank will check your credit-worthiness through your credit history and make a credit report.
A credit history is a record of a borrower’s repayment of debts. A credit report is a record of the borrower’s credit history from a number of sources, including banks, credit card companies, collection agencies, and governments.
A CIBIL credit score takes time to build up and usually it takes between 18 and 36 months or more of credit usage to obtain a satisfactory credit score.
Why does the CIBIL credit score matter?
The CIBIL score plays a critical role in the loan application process. When someone approaches a bank or a financial institution for a loan, the lender first checks the applicant’s CIBIL score and report. If the CIBIL score is low, the bank may not even consider the application further. If the CIBIL score is high, the lender will look into the application and consider other details to determine if the applicant is credit-worthy.
Improve your CIBIL score
You can improve your score by practising financial prudence – repay your Credit Card bills on time, don’t miss your loan EMIs, never default on debts, use credit wisely. You can read more on how to improve your cibil score.
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