What is CIBIL Score? Why is it important?

 

 

A CIBIL Score is a 3-digit numerical score based on a statistical analysis of a person's credit history to represent his/her creditworthiness. It is compiled information that indicates your repaying capacity and credit limit.

CIBIL stands for Credit information bureau of India Limited, which acts as a central repository of credit information in India.

Factors affecting the CIBIL score

• Payment History
• Length of credit history
• Credit Mix
• High credit utilization
• Outstanding debt
• Multiple credits enquires
• Credit history

What do banks check in the CIBIL report when one applied for a loan?

• Existing loans if any and their dues
• Existing credit cards and their dues
• EMI's      or credit card payment track record
• Number of loans and credit card applications
• Loan repayment potential
• Details of all bank accounts
• Current balances in all the accounts
• Number of times an address has been changed
• Spouse credit history and repayment record
• Any settlement occurred due to late payments.

Steps to improve the CIBIL score

• Pay credit card dues on time and in full, do not opt for minimum pay.
• Choose a card with a higher credit limit
• Do not use more than 30% of the credit limit
• Avoid defaulting your EMI's
• Regularly check credit reports and report for any inconsistency
• Monitor your co-signed, guaranteed, and joint accounts
• Avoid applying multiple times when loans are rejected

A good credit score helps you in attracting a better interest rate and credit cards with better offers and benefits.

CIBIL Score	Credit Worthiness	Credit/loan approval probability
< 600	Urgent action needed	Low
600 – 649	Musky and doubtful	Difficult
650 – 699	Satisfactory or Fair	Possible
700 – 749	Good	Good
750 – 900	Excellent	Very High

Check CIBIL score for free from the below sites:

https://www.cibil.com/freecibilscore

https://www.paisabazaar.com/cibil-credit-report/