Getting a loan approved is not a walk in the park, even when you have collateral to offer. The CIBIL score plays a very crucial role when it comes to applying for a credit card or loan. The lender may accept or reject your application based on your cibil score. While your CIBIL score is private, when it comes to applying for a loan, it can be extremely useful. Most banks take into account the applicant’s CIBIL score before granting him a loan or a credit card and most individuals want to know what exactly CIBIL Score entails and why it’s important. CIBIL Score is very important and is mandatory for getting a loan. It determines how good you are at managing your finances. The score is calculated from your past credit history and there are many things that are taken into consideration when calculating it.
What is CIBIL Score?
The CIBIL Score is a 3-digit number that rates your commitment to repay the borrowed amount. The score ranges between 300 and 900. 700 and above will be the top credit card users. Cibil scores go down as you take more loans, don’t repay them on time, and borrow a lot. CIBIL was established to help the capital market, banks, and financial institutions, to facilitate the analysis of loan repayment capacity. CIBIL has a vast database and it’s present in every state in India.
How Low Cibil Can Impact Your Loan Application?
No matter how strong your personal profile may be, a low CIBIL score will adversely affect your loan application. A credit information bureau record comprises personal information such as your name and address, loan repayment history, credit score, and many other details. All financial institutions use this information to evaluate your eligibility to access money in the future. Banks and NBFCs assess not only your ability to pay back the loan but also check whether you have a track record of defaulting on payments in the past. If you have a less than desirable credit rating, especially if it is below 750, it can mean you will face quite some trouble applying for any loan.
Whereas, a low CIBIL (Credit Information Bureau of India Limited) score does not guarantee that you will be denied a loan or a credit card. This is just a reality for the majority of people and almost everyone has a CIBIL score below 750. A good understanding of how CIBIL works and ways to improve your score are the first steps towards improving your financial health. There are various lenders who offer loans regardless of what your CIBIL Score must be. Let’s discuss a few such lenders in the market:
FAQ's
Cibil scores provide you with many benefits, such as cheaper interest rates on loans and credit cards with better benefits and rewards. A good Cibil score can help you avail of pre-approved loans, negotiate discounts on loan processing fees and other charges, and receive higher credit card limits.
Improving your CIBIL score is simple — you just need to improve your CIBIL score in four key areas. It’s easier than you think. Following these simple guidelines will help improve your CIBIL score fast. Here are four easy ways to improve your CIBIL score: 1. Repay credit card dues on time 2. Limit credit utilization 3. Apply for new credit cards 4. Keep a check on your CIBIL report, and 5. Know about the different types of credit products and services.
Any CIBIL score number above 700 is considered to be a good CIBIL Score.
Your CIBIL Score is calculated using a number of factors, including your repayment history, credit utilization ratio (the amount of debt you’re using compared to your available credit), and how many times you’ve applied for credit recently.