What is the CIBIL score? How does this help your financial future?

What do we mean by the term ‘CIBIL Score’? A CIBIL score is a consumer credit rating check. Simply defined, it is a three-digit numerical summary of a consumer’s credit history and a reflection of the person’s credit profile. However, a candidate should be aware that the CIBIL score is based on past credit behavior, which involves borrowing and payment habits shared regularly with CIBIL by banks and lenders. Additionally, we need to know more about the details presented in the CIBIL consumer report.

The CIBIL score can be based on the details found in the accounts and requests section of the CIBIL report, including all kinds of loan statuses or credit card, repayment statuses, outstanding amounts and days after the due date. So, what you need to know is that your CIBIL score varies from 300 to 900. Wondering what happens if your score is at 900 or 300? The higher the score, the more likely you are to get your loan application approved. So, if you want your credit card or loan to be approved by the bank, you must maintain your CIBIL score close to 900.

A CIBIL score is evidence of a person’s past credit behavior and is used to indicate their future actions. The CIBIL score highlights the creditworthiness of a consumer in accordance with this idea. TransUnion CIBIL, formerly known as Credit Information of India Limited, is one of India’s leading credit information companies, with one of the largest repositories of consumer information. It was founded in 2000.

What affects your CIBIL score?

By considering a large number of macro-level data points and trends, and using 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 main factors that affect a consumer’s CIBIL score are:

Payment history.

Secured or unsecured loans.

Use of credit.

Information.

Your financial future depends on your credit score

The more creditworthy you are, the less risky you are as a borrower. Therefore, your chances of loan or credit card approval will naturally be higher. 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 your management over the years. Your application will be purely and simply refused if your score is close to 300 or slightly higher. If your score is 700 to 800, you can expect a favorable outcome in most cases.

To cite a basic example, suppose you have a CIBIL score between 750 and 900. In this case, if you have applied for a loan, you can possibly get a lower interest rate on the same. You can also get more favorable terms and conditions (provided you meet other eligibility criteria), including loan term and repayment. In contrast, someone with a CIBIL score between 600 and 750 will sometimes find it difficult to get the loan sanctioned or pay a much higher interest rate in order to balance the lenders’ perceived risks. So if you look at it from that perspective, you can actually get higher interest savings in the long run if you have a good CIBIL score.

What do we mean by CIBIL?

What exactly do we mean when we talk about a CIBIL report? It is nothing but a consolidated credit report. It includes details such as the following:

Consumer CIBIL score.

Summary of credit.

Personal information.

Employment information.

Contact information.

Loan account information.

Lenders will carefully review this report before sanctioning any request. Therefore, you should periodically check not only your credit score, but also your report. It will help you find errors (if present) and rectify them to improve your CIBIL score. In summary, your CIBIL score directly impacts your ability to obtain credit in the future. Therefore, maintain it with caution and you will undoubtedly reap the benefits.

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