CIBIL report is a summary of your Credit Information Report (CIR). It collects information from all banks and financial institutions and presents a summarised report about your loan accounts along with the repayment track of your loans. CIBIL Score is a 3 digit numeric summary of your credit history. A CIBIL Score ranges from 300 to 900.
- Why CIBIL Score important?
- Parts of CIBIL Report
- Meaning of Good CIBIL Score
- Benefits of a Good CIBIL Score
Why CIBIL Score important?
CIBIL scores play an important role in the approval of your loan application. On the basis of your CIBIL score report, every bank will decide whether to accept your loan application or not. CIBIL report gives a clear picture of your total loans, an analysis of your past credit usage, and your loan repayment track record. If you have a low credit score, then the bank will reject your loan application for the reason of ‘bad credit history’ and on the contrary, if you have a good credit score then every bank will get ready to accept and sanction your loan application.
Rule: ‘Higher the Score, Higher the change of getting sanctioning of the loan application’
Lower the Score, higher the chance of getting the rejection of your loan application.’
Parts of CIBIL Report
A CIBIL report is divided into 6 parts
The CIBIL Score is a 3 digit numeric summary of your credit information report. CIBIL Score ranges from 300 to 900 or ranges from -1, 0, 1.
This section contains your personal information such as your name, date of birth, and gender. it also shows your identification details like PAN number, Passport Number, Driver’s License number, Voter ID number, or Aadhaar number. This is the personal information that is reported by the lenders.
This section displays your address, mobile number, phone number, and email address as reported by your lender. it also explains whether your address is an office address, residential address, temporary address, or permanent address.
This section gives details about your employment information like occupation and income
This is the most important section of your credit information report. it gives complete details about all your current and past loans and credit card accounts. It also gives details about the lender’s name, type of credit facility (i.e., housing loan, auto loan, personal loan, business loan, credit card, etc.), loan account number (whether single or jointly held), when each account is opened, date of the last payment, loan amount, current balance, amount overdue (if any) and most importantly, a month on month record of up 36 months of your repayment track.
This section provides details of all enquiries made by the lender for your various credit applications and includes the name of the lender, date of the application, the type of loan, and its amount.
Meaning of Good CIBIL Score
CIBIL score ranges from 300 to 900. The CIBIL Score is considered a good score as it is closer to 900. In general, if your score is greater than 750 then it is considered a good CIBIL score, and the lender will easily assess and process your loan application.
If your CIBIL score ranges from -1, 0, 1 then it is not a bad thing. However, the CIBIL Score of -1, 0, 1 is due to 3 major reasons. a) You do not have a credit history which means you are new to the credit system. b) Or you have no credit exposure. c) You have had no credit activity in the last couple of years.
Benefits of a Good CIBIL Score
Eligible for loan
Every bank prefers to give a loan to the one who has a good CIBIL score. Now banks have incorporated the CIBIL score as a major eligibility factor. For example, some banks have decided to have a CIBIL score of a minimum 750 as the eligibility criteria for processing the loan applications received under a personal loan, auto loan, or housing loan. This means the bank will not accept the application until you have a score of 750 or above.
Easy loan approval
If you have a good credit score then the processing of your loan application will be processed priority. Loan approval will be quick and easy. Some banks have pre-approved loans like personal loans, auto loans, or credit cards for their customers with good CIBIL scores.
Concession in rate of Interest (ROI)
Having a good score is like an asset to the person. If you have a good score then you have the power to negotiate the rate of interest (ROI), processing fees, or any other charges levied by the bank while processing the loan application.
Higher Loan amount
A good score represents that you are a responsible borrower with a good repayment track record. So, banks may easily enhance the existing loan limits and limits of your credit card.
With a higher score, you can apply for a longer tenure, like 7 years of repayment tenure in the Auto loan, 25 years loan tenure in the case of housing loans subject to your age eligibility.
Now you have an idea about the CIBIL report and the importance of a good CIBIL score. Do you want to know how to improve your CIBIL Score?