Banks identify credit worthiness of a borrower on the basis of the credit score. This credit score/CIBIL helps banks and financial institutions evaluate who and how much credit to give.Suppose you want to get your dream home in delhi, better to increase your cibil score
The CIBIL- Credit Information Bureau India Limited keeps track and record of every credit transaction of the customer across every major bank.
How Cibil works?
CIBIL evaluates the customer on the basis of the credit score. The customers entire credit history is evaluated and via analytics converted into a certain number which represents the risk worthiness of the customer to give credit. The score is computed in the range of 300 to 900, with 900 representing a good potential credit worthy borrower.
Any defaults in payments, cheque bounces on loans, late EMI's, etc can affect your credit score adversely. A good credit information report helps financial institutions take quick decisions on approving the loan. To ensure that your score is high, it is important to repay loans on time, process EMI and credit card repayment on time every month.
Advantages of good Credit score?
- Fewer documents will be required for loan processing
- Your application gets processed faster
- Probability of getting lower rate of interest
- Manage your cash outflow
- Refinance an existing loan to make use of lower rates of interest to make debt burden easier to manage
- Pay on time. Always.
Can I improve my Credit score?
Yes, all that is required is some amount of planning and being conservative with expenditure.
Be disciplined about your finance. Make sure to pay all debts on time and avoid over-leveraging yourself.