CIBIL score is a three-digit number which represents your credit history. The score is calculated on the basis of an individual's credit report which contains his/her credit history.
What is CIBIL Score?
CIBIL score is a three-digit number which represents your credit history. The score is calculated on the basis of an individual’s credit report which contains his/her credit history. The CIBIL score ranges between 300 and 900. The higher the score the better. If the score is near 900 then there is more chance for banks to grant loans while if there is low score it will be difficult to get loans from banks.
Why is CIBIL Score important?
CIBIL score is important because it is used by a lot of credit institutions to check if an individual is credit worthy when s/he applies for a loan. Also, sometimes when a person applies for a visa, authorities ask for the applicant’s CIBIL score.
Factors affecting CIBIL score:
– Credit History: Credit history carries most weight. 30 per cent of your CIBIL score is affected due to delay in payments.
– Credit mix and duration: Too many loans and credit cards affect about 25 per cent of your CIBIL score.
– Credit exposure: 25 per cent is when the credit limit is increased.
– Other factors: 20 per cent is attributed to other factors.
Top rules to maintain a good CIBIL score:
– Always make your repayment on time.
– Maintain a healthy mixture of secured and unsecured loans.
– Avoid making multiple queries regarding loans or credit cards.
– Check your CIBIL score report regularly.
According to a report by Credit Mantri, if your CIBIL score is between 300-599, then you do not qualify for a loan. If the CIBIL score is between 600-749, although the score is not very high but gives an individual a good chance of getting a loan approved. 750 and above gives you the best chance to get a loan approved from a lender. Also, a person might be able to negotiate a lower interest rate if his/her credit score is good.