When you first approach a financial institution for credit, be it a loan or a credit card, they always evaluate your creditworthiness through a CIBIL check. CIBIL (The Credit Information Bureau (India) Limited) is one of the credit information bureaus licensed by the RBI (Reserve Bank of India).
What is a Good CIBIL Score?
A CIBIL score is a 3-digit number that ranges between 300 and 900 and helps lenders identify how responsible the individual is with borrowing and repaying borrowed credit.
Excellent Rating
A CIBIL score between 750 and 900 is considered excellent by lenders.
Better Terms
A good score improves your chances of credit approval with better lending terms and moderate interest rates.
Higher Approvals
A higher CIBIL score often prompts lenders to approve a higher loan amount and provide quick approvals.
Factors that Impact CIBIL Score
Your CIBIL score is calculated based on several aspects. Understanding these factors helps you maintain a healthy credit profile.
Credit Mix
Having a balanced mix of secured and unsecured credit, in the form of both loans and credit cards, is considered beneficial for a positive CIBIL report.
Multiple Enquiries
Frequent credit score checks or multiple loan inquiries in a short period of time often indicate financial instability or aggressive borrowing behaviour, which impacts the CIBIL score.
High Credit Utilisation
When you utilise a significant percentage of your sanctioned credit limit, it negatively impacts your CIBIL score. Keep the utilisation below 30% to improve your score.
Benefits of Maintaining a Good CIBIL Score
Maintaining a good CIBIL score leads to better financial opportunities and opens doors to favourable lending conditions.
Competitive Loan Terms
Lenders may offer competitive loan terms to those with a good CIBIL score, making borrowing more accessible and affordable.
Lower Interest Rates
You may qualify for lower interest rates, which translates to significant savings over the loan tenure.
Better Negotiation Power
With a strong score, you can negotiate for better borrowing terms and conditions that suit your financial needs.
Your CIBIL Score is Your Financial Blueprint
Your CIBIL score is the blueprint of your credit behaviour and financial stability. The score not only reflects your past financial behaviour, but it also subsequently impacts your ability to borrow in the future.
By maintaining a good CIBIL score, you ensure access to better financial opportunities, competitive interest rates, and favourable loan terms. It's an essential tool for building a secure financial future.