Borrowing and lending are concepts that most of us are familiar with. You’ve probably met at least one person who frequently forgets to return money borrowed. Because of their forgetfulness, this makes you reconsider lending to them. Similarly, lending institutions would prefer to make loans and credit cards available only to those whom they consider creditworthy. The CIBIL score is one of the important metrics used by Indian credit institutions to assess an individual’s creditworthiness.A high CIBIL score indicates not only your strong financial discipline, but also your honesty. When you apply for a loan or a credit card, your most recent score (from the previous six months) is checked. In general, any score above 700 is considered excellent, though some banks set the bar high and others are willing to lower the standard.
Who Manages The CIBIL?
TransUnion CIBIL is India’s first credit bureau or credit information company, founded in 2000. Individuals’ CIBIL scores are computed by the firm using consumer information stored in their repository. They are well-known for the accuracy and transparency with which they calculate the score.
If you have not handled your credit RESPONSIBLY in the past, your credit score is likely to be low, indicating that you have low creditworthiness. As a result, most preferred lenders or credit card issuers will not approve your credit application. However, if you understand why you have a low CIBIL score, you can improve it by following some best practices. Continue reading to learn about these reasons and the best practices for improving your CIBIL score.
Reasons Of Low CIBIL
Credit Information Bureau of India Limited (CIBIL) was established in 2000 as a Credit Information Company (CIC). This credit bureau, now known as TransUnion CIBIL, collects and maintains loan and credit card payment records for both individuals and businesses.
Loan and credit card payment information is provided on a regular basis by member banks and other types of lenders. The CIBIL score is calculated using complex statistical formulas developed by CIBIL.
Your CIBIL score is a three-digit number that lenders use to determine your creditworthiness. This score ranges from 300 to 900, with 750 being considered a good score.
The disadvantages of having a low CIBIL score are that your loan or credit card application may be rejected outright, you may have to wait longer than usual, there will be more paperwork involved, and you may end up paying a much higher interest rate. If the lender chooses to consider your application, it may be considered in some cases.If your loan is denied, you will be unable to improve your standard of living. Your dreams of owning a home, driving a car, and educating your children will remain unfulfilled.
How much CIBIL score is required for a Credit Card?
While a CIBIL score of 750 or higher is preferred, people with lower CIBIL scores may also be eligible for a Credit Card. Because the risk is higher for people with a lower CIBIL score, the interest rate is usually higher and the credit limit may be lower than for those with a high CIBIL score. There may also be restrictions on how the Credit Card can be used. However, there is no set minimum CIBIL score for credit card approval. You can check with your banker or apply online. The bank executive will conduct a background check on your CIBIL score and communicate the approval criteria.
It is therefore preferable to maintain a minimum CIBIL score of 750 in order to receive better credit card offers and faster approval. One of the eligibility requirements for getting your Credit Card approved is a CIBIL score. These points will assist you in understanding how to check your credit eligibility in order to obtain a Credit Card.
CIBIL Score for Home Loan
CIBIL scores are heavily used in the processing of home loan applications. In fact, it is a major criterion used by banks to determine whether or not to process a home loan application. When you submit your completed home loan application, the bank will first review your credit score and history. If your credit score is low and you have a poor credit history, your application will most likely be denied.If you have a high CIBIL score, your home loan application will be processed more quickly. While there is no universal score, each bank has a minimum CIBIL score that serves as a cut-off or indicator when accepting or rejecting applications. In general, a score of 750 or higher is considered good, a score of 350-750 is considered average or possibly unacceptable, and a score of less than 350 is considered poor.
The same is true for credit cards and home loan approval. When it comes to the exact value of the CIBIL score required for home loan processing, different banks have different criteria. However, a credit score of 700 or higher is considered good enough for banks to consider your home loan request. In this regard, a good credit history is also essential.