Credit Score and Importance of Maintaining a High CIBIL Score

Know What Is The CIBIL Score

Bank Loan plays an important role in fulfilling our needs in the modern life style without the worry of financial crisis. Bank loans are based on two way, mutual relationship between lender and the borrower. Banks or financial institutions are considered the credit worthiness of the customer by gathering a Credit Information Report (CIR) from Credit Information Bureau (India) Limited or in-short CIBIL. It then collects and maintains records of an individual payments relating to loans and credit cards a customer using. CIBIL uses these information provided by its member banks or financial institutions periodically say on a monthly basis. This creates Credit Information Reports (CIR) and credit scores for each borrower to evaluate and approve loan applications.

 A three digit numeric summary of your credit history is the CIBIL Score of your financial status. The Score is calculated by using the details found in the Accounts section and Inquiries sections on your Credit Information Report (CIR) and ranges from 300 to 900. The closer your CIBIL Score is to 900, the more chances your loan application will be viewed and considered by a financial institution. The Score plays an crucial and important role in the loan approval process.

Factors Affected Your CIBIL Score

Here is the list of what impacts your CIBIL Score:

1. Delayed or missed payments of your EMI or dues, shows you are having trouble paying your existing credit obligations and will negatively affect your score.
2. An increase in the utilization of Credit Limit of your Credit Card indicates an increased repayment burden and may negatively affect your score.
3. Higher percentage of Credit Cards or Personal Loans.
4. A balanced mix between secured and unsecured loans is likely to have a more positive affect on your score.
5. Multiple Loans and Credit Cards opened recently indicates that your debt burden has increased which will negatively impact your score.