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Define Cibil Score And How It Is Generated?

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CIBIL Score

The CIBIL Score (Credit Information Bureau India Limited), which ranges from 300 to 900, is a three-digit numerical summary of your credit history, rating, and report. A credit score of around 900 is considered excellent, and you should have no trouble obtaining a credit card, personal loan or any other loan. On a variety of CIBIL partner websites in India, you may check your CIBIL score free by providing some basic information such as your name, gender, DOB, PAN, and other contact information.

 

The CIBIL score is a sign of your creditworthiness. It is the most essential criteria considered by lenders when approving your loan or any other form of credit. CIBIL, India’s oldest bureau, generates this score.

How can you find out what your CIBIL score is?

  • In general, credit bureaus do not issue free CIBIL scores. Many third-party companies, on the other hand, offer free CIBIL scores. You can also check your CIBIL score on the official CIBIL website, although there is a fee for this service. On the official website of CIBIL, you can only check your CIBIL score for free once a year.
  • Because CIBIL scores are such an important factor in acquiring any type of loan nowadays, many of the partner organisations and lenders provide free CIBIL scores. There will be no fees, and you will be able to check your credit score in seconds. Check your free CIBIL scores on CIBIL-powered websites to get your true ratings and create steps to improve your credit history.
  • To check your CIBIL score, you must first submit some basic information, such as your name and address.

What factors go into creating your CIBIL score?

  • The amount of credit you’ve borrowed in the past determines your CIBIL score. Factors including your credit limit utilisation rate, payment rate, length of payment history, whether your borrowing is secured, and the amount of credit inquiries affect your credit score. When you take out a loan or apply for a loan from a bank or a non-bank financial institution, CIBIL receives the information and adds it to your credit score. When you apply for a loan again, that score is made available as a reference to all other lenders.
  • If you consistently skip payments and EMIs, your credit score may suffer, and you may have difficulty obtaining a loan.
  • If you are a person who pays all of their bills on time and consistently, each timely payment will enhance your credit score, and a high CIBIL score will increase your chances of getting a hassle-free loan.

Factors that influence the CIBIL score

  • Your credit repayment history
  • Your credit report’s accuracy
  • Ratio of credit usage
  • Your credit and lending history
  • submitting a number of credit applications and making frequent queries
  • There isn’t a good balance of secured and unsecured loans.
  • Paying only what is required or the bare minimum

Tips to maintain your CIBIL Score

  • Paying your bills on time is one of the most important ways to improve your credit score.
  • Keep your credit utilisation to a minimum. To put it another way, keep your credit usage ratio low.
  • Applying for many credit cards is a bad idea.
  • Maintain a close eye on your credit report on a regular basis.
  • Balance the several forms of credit limits you have. A proper mix of secured and unsecured loans should be used.
  • Keep track of previous debts on your credit report, especially the ones that have been open for a long time.
  • Finally, remember to be patient and consistent.

 

Final Thoughts

When you ask for a personal loan, home loan or any other loan, the lender will look at all of your debts and repayment history to determine your creditworthiness based on your CIBIL score. You should always go for a CIBIL score check before applying for a loan

A high CIBIL score means your finances are in order and you have a good track record on all previous loans. It can also help you be approved for a loan at the best available rate. A low CIBIL score, on the other hand, can damage your reputation.

 

Read Also: Guide Before Applying for a Credit Card