Ever wondered what those 3-digit credit numbers are and what is CIBIL score?
This score, which is generated by TransUnion CIBIL, credit bureau based on your past credit information. A CIBIL score ranges between 300 to 900. In order to get a successful loan or credit card, it is mandatory for you to have a minimum score of 750 on your name. The higher the CIBIL score, the easier it gets for you to avail an extended line of loans from the bank.
When it comes to getting your loan or credit approved, credit score plays a major role. It is an essential part of a bank’s process to check your credit score via CIBIL before approving the loan or credit you applied for. Your CIBIL score provides banks an assurity and creditworthiness about you. So that they can be sure of you returning the loan on a timely basis. Know how to build good CIBIL score in this article below:
Facts Related to CIBIL Score
Credit Status - When it comes to determining your credit status, CIBIL report plays a role here but CIBIL will not let you know in what purpose your scores are used. Know that your CIBIL scores can be utilised in credit assessments or elsewhere but the final decision regarding handing out the loan lies totally with the lending bank. It is really important for you to build good portfolio for CIBIL score.
Investment Information - This data comprises your savings and investment accounts with the banks. Your CIBIL report isn’t considerate of any transaction that took place with respect to such accounts. CIBIL report only focuses on your credit status and history, the credit history and debt actions you performed.
Improvement in your Credit Score - Upon recording your data in the credit report, CIBIL doesn’t give you any suggestion to improve your credit score. You will not be advised or suggested to reduce the number of credit cards or take another loan or reduce the activity which is negatively impacting your score.
Credit Utilisation Ratio - You should know that the ratio between your credit limit and usage should be maintained as 2:1. But, the CIBIL report on the other hand doesn’t mention this.
Defaulters List - If a credit taker is unable to make a timely payment, CIBIL doesn’t put him under defaulters list or blacklist that individual. CIBIL will only inform you that your score has been impacted because of the untimely payment.
Monthly Reports upto Last 3 Years - The Credit Information Report only stores up to the last three years monthly reports. Any monthly report prior to three years remains unrecorded. It is advisable that you check your CIR twice a year in order to identify any error in the report.
Soft Inquiries - Your credit score is not hurt when you enquire about your score directly from credit bureaus. But, your CIBIL score gets impacted when credit card companies or banks enquire about your credit report from authorised entities.
No Credit History doesn’t Mean you Have a Perfect Score - Many of the people assume that if they don’t own a credit card or haven’t taken any loan then they have succeeded in maintaining a perfect CIBIL score. On the contrary, such individuals will have a tough time in getting their request for a credit report or enquiring about credit score from CIBIL.
CIBIL Score can be Checked Numerous Times - You have all the freedom to check your CIBIL score as many times as you wish to. An individual shouldn’t be hesitant to inquire about his CIBIl score directly from the credit bureau as this will not impact their credit score.
Applying for Multiple Loans/Credit Cards can Lower your Score - Opting for multiple credit cards or loans could hugely affect your credit score. More the home loan, personal loan, credit cards, higher the chances of you being dependent on credit and this will in turn decrease your creditworthiness.
It is important and crucial for people to understand facts about CIBIL scores and implement them in real life. While you implement these facts in your life you make it a point to not let credit go on to your head.