There are many banks and financial institutions available across the country from where people can avail different kinds of loans such as home loan, personal loan, education loan, vehicle loan, etc. These institutions also offer varied credit cards suited to various needs of different classes of people.
Whenever you want to avail a loan, the lender checks information about CIBIL score along with other things such as your income, your employer's details, your mortgages, etc. before approving your loan. CIBIL Score determines your credibility to repay the loan without defaulting it. CIBIL Score is very significant for loan approval as it is readily available and is an important deciding factor for the lenders for whether to extend a loan or not.
What about CIBIL Score? CIBIL Score is very important in determining your eligibility to avail loan, especially Home Loans which are long term loans ranging from 20 years to 30 years.
CIBIL Score is a 3-digit number which shows a person's creditworthiness. A CIBIL score is nothing but a credit score generated by credit bureau CIBIL. It is a summary of your credit history. CIBIL Score is calculated on the basis of different types of loans availed by you from various lending institutions which can be found in the CIBIL Report.
There are four credit bureaus which provide credit scores of the individuals. One of these credit bureaus is Credit Information Bureau India Limited (CIBIL) which has currently been renamed as TransUnion CIBIL and the credit score calculated by it is known as 'CIBIL Score'. CIBIL Score ranges between 300 and 900. 300 is the lowest score and 900 is the highest score. Higher your CIBIL Score, better are the chances of your getting the loan approved.
CIBIL Score of 700 and above is considered as good. If your CIBIL Score is 700 and above then you can get the loan very easily, at lower interest rate and at favourable terms & conditions. As per CIBIL, more than 79% of approved loans are for those individuals with a score of 700 and above.
Various determinants of CIBIL Score are Credit Utilization, Credit History, Payment History, Types of Loan Accounts, Credit Mix, etc. These factors posses different weightages while calculating CIBIL Score.
It is to be noted that even if a good CIBIL Score is an essential requirement by the lenders, it does not guarantee loan approval.