Importance of CIBIL
What is CIBIL?
The CIBIL score refers to the credit score supplied by TransUnion CIBIL as part of an individual's CIBIL report. It's a three-digit score that ranges from 300 to 900 and is based on your credit history. A CIBIL score of 750 or higher reflects prudent credit behavior tendencies, whereas a score of 500 or less is considered a low CIBIL score.
The borrower's payment history, number and types of loan accounts, outstanding and opening loan amounts, credit inquiries, and guarantors on the loan, if any, all go towards determining CIBIL scores. Banks and financial organizations have their standards for what constitutes a satisfactory CIBIL score.
In the loan application process, the CIBIL score holds significant importance. When someone applies for a loan at a bank or financial institution, the lender looks at the applicant's CIBIL score and reports first. If the CIBIL score is poor, the bank may not even review the application. Conversely, with a high CIBIL score, the lender will investigate the application and consider additional factors to assess the applicant's creditworthiness.
The CIBIL score acts as the initial impression for lenders; a higher score increases the likelihood of the loan being reviewed and approved. The decision to lend rests with the bank, and CIBIL does not play a role in determining the approval of the loan or credit card.
A score of 700 is regarded as good in most cases.
Factors affecting CIBIL score
While the specific algorithm for calculating a CIBIL score based on a person's credit history is confidential, the following are some of the important elements that are known to affect your score:
- Repayment: Paying your loan EMIs and credit card dues on time is possibly the most crucial thing to remember. While this may appear to be a basic guideline, failing to observe it is a common and readily avoidable mistake. While skipping the payment due date once or twice in a decade may not have a substantial influence on your CIBIL score, doing so regularly will. That isn't all, though. Settlement or defaulting on a loan or credit card dues can have a long-term negative influence on your CIBIL score. Such behaviors have a long-term negative impact on your score (up to 7 years).
- Credit Utilization Ratio: This is a simple calculation that compares your current outstanding debt to your given credit limit on all active credit cards and loans. Ideally, you should keep this below 30%, i.e. limit credit utilization to 30% or less of the allotted limit across all kinds of credit. Lower credit use is a sign of fiscal responsibility, which improves your credit score.
- Credit Mix: In India, credit can be of two types – secured credit such as home loans, car loans, secured credit cards, etc, and unsecured credit such as personal loans and credit cards. Having too much-unsecured credit can make it appear as if you're more likely to default in the future. Having a healthy mix of secured and unsecured credit will help you keep your CIBIL score good.
- Age of Credit History: The longer you've had credit cards or loans, the better your CIBIL score will be, assuming you've handled them properly. A longer history of prudent credit use indicates that you are more likely to be fiscally prudent in the future. This is included in your CIBIL score as well; however, the impact of credit history age is likely to be less than that of repayment history.
Factors that don’t affect cibil score
What factors have no bearing on your CIBIL score?
Aside from payment history and credit exposure, a variety of other factors influence your credit score. However, some elements will have no bearing on your final score. Here is a list of them:
- Obtaining a copy of your credit report
- Savings Account
- Fixed Deposit
- Debit Card
- Cheque bouncing
Advantage of CIBIL Score
A high CIBIL Score provides you with a variety of advantages over individuals who have no CIBIL Score or a low score. If you have a high CIBIL score, you are eligible for the following benefits:
Easy Credit from Lenders: Having a strong CIBIL Score makes it easier to obtain loans and credit from lenders since your good credit score gives lenders confidence that you will repay your loans on time.
- Quick Loan Approval: A strong CIBIL Score indicates that you are a good candidate for lending money. As a result, banks strive to provide you with a loan as soon as feasible. Lower-credit-score borrowers must provide a variety of paperwork and obtain guarantors, making the loan disbursement process time-consuming.
- Low-Interest Credits: People with a good CIBIL Score are eligible for loans with a lower interest rate. Those with a poor credit rating are given loans and credit at higher interest rates.
- More Negotiation Power: If you know your CIBIL Score is really high, you have the power to negotiate a lower interest rate.
- Exciting Credit Card Offers: People with a high CIBIL score are eligible for a variety of credit card offers from various institutions. These cards come with bigger credit limits, more benefits, and incredible deals and cashback.
- Chances of Getting a Long-Term Loan: A loan with a longer term has lower EMIs, which is better for your monthly budget.
- Pre-Approved Loans from Banks are more readily available: A bank's pre-approved loan is a terrific approach to receive a rapid personal loan from them.
- Easier to Get Higher Limits on your Credit Card: Higher credit card limits are usually determined by your credit score and your income. Your card issuer will be more likely to increase your credit limit if you have a good credit score.
How to acquire the loan at a low cibil?
You can acquire for the loan at low cibil from Chintamani finlease in the following ways:
Before applying for a loan, ensure that you meet the following requirements:
|age||18 years and above|
|Employment type||Salaried and self-employed|
|Minimum net income||Rs. 30,000/-|
Salaried - Employed for a minimum of 6-12 months.
Self-employed - must have a minimum business tenure of 3 years.
Please send all of the papers listed below to firstname.lastname@example.org :
- Last three months' salary slips/last three-year income tax return from the date of application.
- Last three months bank statement.
- KYC documents as requested.
- Electricity bill (private property)/Rent agreement (rented property)
If you have any further questions, please don't hesitate to contact us:
216, Ansal Vikas Deep Building, Laxmi Nagar District Centre,
Near Nirman Vihar Metro Station, Delhi - 110092.
Phone : (+91) 9212132955