How CBIL (Credit Bureau India Limited) score affects your credibility?
Thinking of buying a house or a car? The mere thought of applying for the loan is enough to induce stress as in spite of having all the required documents; there’s always a chance of your loan application getting rejected.
It’s true that we can’t provide any guarantee for your loan application acceptance but we can certainly offer you an insight on one of the fundamental component that defines your credibility- CBIL score.
What is a CBIL score?
CBIL (Credit Bureau India Limited) score is a three digit score that plays a pivotal role in determining your credibility. Derived from CIR (Credit Information Report), your CBIL score is determined by taking your entire credit history in consideration. In simple terms, CIBIL score helps the lender to know whether you are capable enough to repay the loan.
How will the CIBIL score influence my loan application?
As the CIBIL score forms the authentic source to reflect your credibility, whenever a lender receives your loan application he refers to your credit score. A score of less than 300 can increase the chances of loan rejection whereas a score between 300-600 or above 900 can process your application to the next level.
Post your credit score check, a review of your recent credit purchases, payment history, outstanding payments, earlier loan repayment durations, etc., is undertaken. Although sanctioning of loan is subjective in nature, the component of CIBIL score certainly influences the decision of concerned money lending institutions.
How do you manage your CIBIL score?
If your CIBIL score is less than 300, here’s how you can improve your CIBIL score:
- Avoid overuse of credit: Use your credit facility only when you actually need it, as over exploitation of credit simply creates a false impression on your lender.
- Clear your dues: Ensure that you act responsibly and clear all your outstanding EMIs and bills on time as the timely clearance of your bill will reflect a healthy loan repaying capacity.
- Periodic check: Through a periodic review of your CIR (Credit Information Report), you can always rectify your errors in case of any.
- Manage your accounts: It is advisable to have only one or at the most two accounts, as the presence of multiple accounts often makes it difficult for efficient management.
- Seek help: If you are finding it difficult to manage your CIBIL score than always seek professional help as that would simplify your credit management.
Having said that always remember that CIBIL score affects your credibility but it’s not the only factor to affect your credibility. Often there have been instances wherein in spite of having a good CIBIL score, the loan applications have been rejected by banks. Also, this does not mean you neglect your CIBIL score, especially when you are applying for a loan.
Besides, having a healthy CIBIL score can also bring in an advantage of low interest rate from your lender, so next time before you apply for a loan always check your CIBIL score to avoid any unforeseen surprises.