Thu. Apr 25th, 2024
cibil score

The creditworthiness of a borrower is an essential parameter on which most banks depend. This score or rating is known as the CIBIL or credit score. Customers should CIBIL score check on a consistent basis. Many websites that are finance related also offer a free CIBIL score check. Banks offer both secured and unsecured loans to consumers, based on their ability to repay the loan. As a result, banks check a variety of information about their customers’ financial history and debt-related behaviour to ensure their creditworthiness. As a result, credit bureaus are used by financial institutions to gather this information, which is known as a credit or CIBIL score.

 

A credit score plays an important role to approve your debt application. Strong credit represents that the lender can trust on you to repay the bill on time. At the same time, a weak credit score means that your lending history records are not good. As a result, your repayment ability is low and you will face difficulty in obtaining credit. 

Scores in the CIBIL Scale

Based on a customer’s credit history, credit bureaus award the following scores. A customer’s credit score varies depending on his or her credit history. Scores vary from 300 to 900 on the CIBIL scale. The closer your credit score is to 900, the more likely you are to get approved for a no-hassle loan. Here are some examples of CIBIL scores and how lenders interpret them.

 

  • CIBIL score of 700 or above: Banks are unconcerned about a CIBIL score of 700 or higher. This means that the banking institutions will offer the lowest possible interest rate on loans. It’s worth mentioning that if your credit score is beyond 750, acquiring a loan will be easier.
  • CIBIL score of 600 to 700: Lenders will also lend to borrowers with a CIBIL score of 600 to 700, which is deemed a low-risk level. However, you may be offered a greater interest rate than people who have a better credit score.
  • Individuals having a CIBIL score between 300 and 600 are regarded to be at high risk. Banks are hesitant to provide debts to applicants having this score.
  • 1–5 CIBIL Score: Customers with a credit score of 1–5 have fewer than six months of credit history. As a result, they have a low CIBIL score. 
  • A CIBIL score of -1 means that you have a low CIBIL score. You have a negative credit history if your credit score is -1. A customer with no credit history has a CIBIL score of -1. They are usually first-time customers who have no credit or loan history. If they want to get a personal loan, a home loan, credit cards, or any other type of credit, they must put in a lot of effort.

Facts about the CIBIL Score

  • The bank balance has no bearing on your credit score.
  • A debit card transaction isn’t recorded on your credit report. A credit card closure, on the other hand, will have an effect on the decisions.
  • The earnings are not recorded on the credit report.
  • The act of frequently checking one’s credit score has no effect on one’s credit score.
  • Several agencies provide credit ratings in a variety of formats.
  • The client has the right to challenge any misleading information.
  • Different credit ratings may be assigned to customers and banks.
  • Free CIBIL scores can also be found on a variety of third-party websites.
  • Due to the fact that personal loans have an unsecured nature, they require a high CIBIL score.

Final Thoughts

The CIBIL score is influenced by the total number of payments made in the past, the amount of credit or funding available and their consumption, the types of credits available and how long they’ve been available, and the number of credit inquiries made in the past. To maintain your credit score, you must investigate and examine all of these elements. You must remember that your CIBIL score is important when applying for any sort of credit, including personal loans and other loans. You might not be able to receive a hassle-free personal loan if you don’t have a good credit score. Because improving your credit score requires time and effort, you must be persistent and methodical in your approach. Knowing how to increase CIBIL score your only goal by paying all of your payments on time. Check your free CIBIL scores on a regular basis.

 

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