CIBIL score is used for credit score and it refers to a 3 digit score between 300 and 900. This score is derived by referring to the credit history of the user found in the CIBIL report. CIBIL stands for TransUnion CIBIL Limited that has the right to access information related to credit.
The credit score defines your creditworthiness in the market. If the CIBIL score is high then this shows that you have paid all the credit on time in the past. Financial institution can rely on you by taking a look at your CIBIL score and offer you loan amount without any hassle.
In India, only 4 companies are licensed by RBI to access the credit information of the people. CIBIL is the most popular company when it comes to checking of credit information of an individual. Others are Equifax, Experian and High Mark.
In case, you don’t have any credit history, then your score will be -1 and if you have not taken any loan from last 6 months then too your credit score will be 0.
CIBIL score ranges between 300 to 900 where 900 denotes maximum creditworthiness. If your score is 750 or above then this gives you a high credibility and many banks will offer you loan easily with attractive offers.
If your score is below 750 then your application for loan will be rejected and you will find it hard to borrow funds. Also, if bank offers you loan then it will be at a much higher rate of interest. So it is mandatory to maintain a CBIL score of 750 or above to get loans easily.
Credit Summary: This includes details related to credit accounts maintained by you in the past. It also gives the details related to balance of the account too. Account summary is generally divided into segments like: revolving accounts, installment accounts, real estate account or collection account.
Account History: This contains the details of all the credit accounts. It also contains lender’s name, type of credit borrowed, account number, date of recent payment, account opening date, loan amount taken, current balance and monthly record of repayment.
Public Records: This section shows up current and previous financial slip-ups, criminal record, if any and bankruptcy as well. This section decides whether you will get the loan easily or not. If you will improve the flaws of this section then you will get loan easily in future.
Credit Enquiry: This is a list that carries the information where third parties have accessed your credit report in last 2 years. You can view all the credit inquiries, but lenders or financial companies will be able to see just a minor cross-section. If a potential lender inquires your credit history and see multiple credit inquiry on your credit report then this proves that you have taken multiple loan in the past.
Your credit score is calculated on the basis of your credit related activities during a financial year. Credit information is given to the customers on monthly basis by the financial institution. All the data is analyzed and then a 3 digit credit score is allotted to the customer for the credit record. Your track record of repaying the amount pays an important role in giving you a good credit score.
Maintaining a good CIBIL score is important as it gets you many benefits while you apply for the loan. Follow these simple steps to maintain a good score:
If you have ongoing EMIs then make sure that you pay them on time to keep your track record clean.
Don't go on applying for too many loans or back to back loans.
Always pay your EMI on time.
Choose the loan repayment tenure carefully and try to choose a lengthy one so that repayment can be planned and done easily.
If your loan does not get approved due to some reason then leave it for some time. Do not reapply it again and again.