Rating and report, and ranges from 300 to 900. The closer your score is to 900, the better your credit rating is. The Credit Information Bureau (India) Limited (CIBIL) is the most popular of the four credit information companies licensed by Reserve Bank of India.
What does credit history and credit report mean in CIBIL? 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 borrower's credit score is the result of a mathematical algorithm applied to credit information to predict how credit worthy you are. 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. The CIBIL score works as a first impression for the lender, higher the score, the better are your chances of the loan being reviewed and approved.
How to improve CIBIL Score? Following points will help to improve your CIBIL score as well as inculcate financial wellbeing. 1. Don’t spend more than 30% of total Credit Card limit in any month. 2. Always make the full payment of Credit Card bill before payment due date. Never revolve the balance by paying the minimum amount due. 3. Never miss payment of any instalment of any debt. 4. Avoid frequent applications to new Credit Cards or Loans. 5. Always honour cheques, EMIs of various loans. 6. Don’t unnecessarily buy things just because they are available on EMIs.
Having high CIBIL score will get you loans easily and on lower interest rates than others.
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