A brand new world of loans and debts has come into existence in the recent times. In this new age, CIBIL score and CIBIL rating are undeniably relevant in seeking loan from conventional lenders. In fact, CIBIL or Credit Information Bureau (India) Limited is India’s first credit bureau. This entity acts as the central repository of credit history for both retail and commercial borrowers.
To cut a long story short, CIBIL generates credit score for every individual, based on which conventional lending agencies decide on providing loans to those people. To put it in different words, a credit score is an estimation of a borrower’s credit worthiness. A typical CIBIL rating for an individual is a three-digit number, which ranges between 300 and 900. Suppose, one has a car loan from DYB bank and housing loan from GTX bank. Both these information will be reflected in the individual’s CIBIL score. Simultaneously, the individual’s credit card histories will also reflect in it.
Interestingly, the score is calculated by an algorithm without involving any manual intervention at any stage. To calculate credit score of a person, his or her credit history for at least six months is required. There are 258 variables used to calculate the score and each of these variables is assigned with a different weight-age.
Thankfully, it is indeed possible to improve your CIBIL score. However, the procedure is time-consuming and could take months at a stretch - if not more. Moreover, the procedure requires one strictly adhere to certain norms and strategies as well.
There are innumerable advantages of having/maintaining good CIBIL score. A sound CIBIL score helps one
- Seek credit easily from conventional lenders
- Quick approval of mortgages
- Avail lowest interest rates on credit cards
- Smooth and fast approval of housing loans at interest rates enviable to others
In short, a good credit score undoubtedly helps one with more bargaining power in cutting deals while seeking loans from the market.
No comments:
Post a Comment