what is cibil score and how it works / what is cibil score for loan

 

                              CIBIL

           CIBIL represents as “credit Information Bureau India Limited”. It ranges from 300-900 and it is calculated by the “Trans union CIBIL Credit Bureau”.

                             

Meaning:

      A credit history is a record of borrower’s repayment of debts & is 3- digit numeric summary of credit history, rating & reports.

           It is authorized by reserve bank of India &  falls under the regulation of the credit information.

    Cibil is a score that helps banks, companies to identify an applicant’s credit-worthiness through a record of their credit history & which is numeric summary used by financial institutions.

                           

    

Calculation of CIBIL Score:

·       Payment history.

·       Credit Exposure.

·       Credit type & duration.

·       Other factors.

Payment history:

      It is one of the biggest factors. It affects the Civil Score in positive or negative. If we pay loans, bill, EMI, on time it will increase our cibil score if we  delay payment or mispayment it will reduce the civil score. Avoid these type of mispayment increase CIBIL score.

                       

     A CIBIL score analysis reported by the financial express revealed if we not paid with 30 days delequence can reduce our civil score by low points.

 

 

Credit Exposes:

     It is also known as the Credit Utilization. It is second factor that affect our CIBIL score. Credit utilization ratio is an amount of credit used by a person to his available credit limit & he should use up to 30% of his total credit card limit.

     If he use total credit card limit lenders could think the person is credit hunger or financial problems & leads to high risk for application.

Credit types & duration:

   If a person maintains a credit card for a long time it indicates that he had experience in handling credit cards.

   If a person plans to buy a car or house in the future, requiring a loan amounts the lender refers the credit and duration. Therefore it is advised to start credit history early.

Other factors:

      CIBIL score calculation is also known as hard inquires. Whenever we apply for credit such as loan lenders takes a CIBIL score from the bureau. These multiple hard inquires can affect the negatives on our score.

CHECK YOUR CIBIL SCORE ONLINE:

          

                                      

        Log on to the official cibil website.

v  

    Click on ‘Get your cibil score ‘.

                              (on the top right hand corner.)

v  

Fill up the online form about personal details.

v  

Choose membership package of 1 month, 6months, or 1 year& pay corresponding fee.

v 

Register as a member by filling details.

v  

The higher your score, the better your chances of securing loan approval. Once the account is created , you will be able to check your cibil score & report.

EASY WAY TO IMPROVE OUR CIBIL SCORE:

                        

                      

Ø Pay EMI, credit card bills on time.

Ø Don’t over use your credit cards as you may seem credit dependant.

Ø Avoid acquiring too much debt.

Ø Be cautious when borrowing & always have a proper repayment plan in place, name, date of birth, address, id proof, past loan history.

WHY DOES CIBIL SCORE IS IMPORTANT?

                                                    

Cibil score is an important factor that is considered by lenders at the time of offering you a loan or credit card.

·       The higher your score,the better your chances of securing loan approval.

·       It intimates to your lender how likely & capable one may be to repay EMI as per the loan schedule.

APPROVAL:

      For approval from bank your cibil should have range of 750.

FACTORS AFFECTING CIBIL SCORE:

      Length of credit history.

      Credit mix.

      Timely repayments.

      Multiple debt applications.

      Spending high on credits.

      Fore closure of loans.

      Credit report error.