One of the prime factors that affect an individual when he or she decides to go for a personal or home loan is the CIBIL score. CIBIL score or the credit score is a three-digit numeric summary of the credit history of an individual. This score is derived by analyzing the credit history found in CIR, which is the history of credit payments made by that individual across the various financial institution and credit institutions over a long time.
What is CIBIL Score ?
The CIBIL score is calculated on the basis of the credit health as shown in the Accounts and inquiry section of the CIR, which ranges from 300 to 900. An average of CIBIL score of 750 is considered to be a good credit behavior.
How does a CIBIL score affect the loan process?
The CIBIL score takes into account of all the credit-related activities with the banks, financial institutions, credit companies and formal lenders and prepares a monthly report on various transactions made by the individual like EMI or credit card payments, it also includes any late and misses payments made by that individual. Then it prepares a report and projects it in a numeric figure which reflects the creditworthiness of that individual giving the lender a quick idea about the recovery ability of the borrower.
Best CIBIL score for applying for any loan.
The best score can be anything above 750 CIBIL scores for applying for any loan through various formal financial institutions. The higher the CIBIL score the better is the chance of getting the loan approved easily. A CIBIL score above 750 proves that the individual has maintained a proper transaction and payment history like timely payment of credit cars and EMI. Whereas, a poor CIBIL score makes the approval of any loan difficult as it proves the instability of the individual’s credit health.
CIBIL score decides the creditworthiness of the borrower and plays an important role while applying for any loan. The lender institution judge on the basis of this CIBIL score for taking any decision, so maintaining a health CIBIL score is very important for everyone.