Are you planning to take a loan? Want to make sure that it is processed quickly and approved as well? Are you looking for a loan at a lower interest rate? Then make sure that your credit score or CIBIL score is good. AT this stage, you may have more questions like that what credit or CIBIL score is?
Credit Score Definition
Credit Information Bureau Limited (CIBIL) is the most popular of the four credit information companies licensed by the Reserve Bank of India. There are three other companies also licensed by the RBI to function as credit information companies. They are Experian, Highmark. Moreover, the most popular credit score in India is the CIBIL score. Let us find out what is it.
CIBIL score maintains credit files on 600 million individuals and 32 million businesses. CIBIL India is part of the TransUnion, which is an American multinational group. Moreover, credit scores are known in India as the CIBIL Transunion score.
Credit score check is a 3-digital numeric summary of your credit history, report & rating, and ranged from 300-900. The closer your score is to 900, the better your credit rating is.
How Credit Score Works
CIBIL score matters a lot in the Indian Financial System where most of the banks and NBFC’s are dependent on it for the purpose of loan approval and disbursal. Your financial life depends on your CIBIL score. It does not matter how smartly have you planned your finances, financial emergencies can emerge anytime, and you may have to apply for the loans. It is then when the CIBIL score would matter a lot. So, below are some of the facets that are influenced by your CIBIL score:
Approval of Credit: Banks and NBFC’s approve credits on the basis of your credit score. Having a higher CIBIL score will increase your chances of getting approvals easily.
Rate of interest offered: The rate of interest offered by the bank is lower for those who are having a high CIBIL score.
Type of Credits: People having a higher credit score get a wide range of credit card offers from the various companies which are not even offered to people having lower scores.
Importance of CIBIL Score
CIBIL is the first and most trusted credit bureaus in Indi. Its scoring techniques are trusted by most of the banks and NBFC’s as the accuracy level of CIBIL is far better than some other credit bureaus operating in India. The grievance redressal system of CIBIL is very customer friendly and thus is prompt in responding back with the quick updation of the missed information. Owing to some of these features, CIBIL has earned a reputation in the industry as the most credible credit bureau of the country. Owing to the features, NBFC’s and banks check an applicant CIBIL score when an applicant applies for the loan.
CIBIL score is the first impression of the applicant in front of the lender. A person who manages his finances well will always have a higher CIBIL score. Lower CIBIL score signifies that the applicant has low creditworthiness, and banks refrain from giving loans to such type of applicants.
If the candidate has a very good CIBIL score, then the institution grants him with a lower interest rate and with the minimum paperwork as well. If the CIBIL score of the candidate is very low, then the banks either do not approve his loan application or grant him a loan at a higher rate of interest. Moreover, only the CIBIL score is not the only criterion that decides whether banks would grant the loan to the applicant or not.
What Credit Score is Needed to Buy a House
Credit members who took out a first-time mortgage and found that an average score among those home buyers ranging from 662 to 730, depending on the state what they lived in.
What Credit Score Do You Need for Mortgage?
For mortgage, a credit score between 700-800 is required. To check the credit score, there are many Apps available over the play store.