What is CIBIL Score? How does it help your financial future?
- The more credit-worthy you are, the less risky you are as a borrower. Hence, your loan or credit card approval chances will naturally be higher as a result. You should be aware that each credit score has its own individuality.
What do we understand by the term ‘CIBIL Score’? A CIBIL score is a consumer credit score check. To simply define it, this is a three-digit numeric summary of a consumer's credit history and a reflection of the person's credit profile. However, an applicant must know that the CIBIL Score is based on past credit behaviour, which involves borrowing and payment habits shared regularly with CIBIL by banks and lenders. Also, we must know more about the details featured in the consumer CIBIL report.
The CIBIL score can be based on details found in the accounts and enquiries section of the CIBIL report, including all kinds of loan statuses or credit cards, repayment statuses, outstanding amounts and days past the due date. So what you should know is that your CIBIL score ranges from 300 to 900. Wondering what happens if your score is at 900 or 300? The higher the score, the higher is your chance of getting your loan application approved. So, if you want your credit card or loan to be approved by the bank, you have to keep your CIBIL score close to 900.
A CIBIL score is proof of a person's past credit behaviour and is used to indicate their future actions. The CIBIL score showcases a consumer's creditworthiness in line with this idea. TransUnion CIBIL, formerly known as the Credit Information of India Limited, is one of India's leading credit information companies, with one of the largest consumer information repositories. It was founded in 2000.
What affects your CIBIL score?
Taking into account a large number of data points and macro-level trends, and with the help of a scoring algorithm, a CIBIL score is generated. If we check it properly, we see that it is based on 36 months of credit history.
The primary factors impacting a consumer's CIBIL score are the following:
Secured or Unsecured Loans.
Your financial future depends on your credit score
The more credit-worthy you are, the less risky you are as a borrower. Hence, your loan or credit card approval chances will naturally be higher as a result. You should be aware that each credit score has its own individuality. The lender will not only check this score but also your credit history and management over the years. Your application will be denied outright if your score is somewhere near 300 or slightly higher. If your score is 700-800, you can expect a favourable application outcome in most cases.
To cite a basic example, suppose you have a CIBIL score between 750-900. In this case, if you have applied for any loan, you can possibly get a lower rate of interest on the same. You can also get more favourable terms and conditions (provided you meet other eligibility criteria) as well including the loan tenure and repayment. In contrast, someone with a CIBIL score between 600-750 will find it difficult to get the loan sanctioned at times or pay a much higher rate of interest in order to balance out the perceived risks of lenders. Hence, if you look at it from this perspective, then you can actually get higher interest savings in the long run if you have a good CIBIL score.
What do we understand by a CIBIL Report?
What do we exactly understand when we talk about a CIBIL report? It is nothing but a consolidated credit report. It includes details like the following:
Consumer CIBIL score.
Loan account information.
Lenders will examine this report thoroughly before sanctioning any application. Therefore, you should periodically check not just your credit score but also your report. It will help you find any errors (if they are present) and rectify the same to improve your CIBIL score. To sum up, your CIBIL score directly impacts your ability to obtain credit in the future. Therefore, maintain it prudently, and you will reap the benefits without a doubt.
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