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Friday, June 18, 2021

It is important to understand the difference between credit score and CIBIL report, they have an important role in taking loans and credit cards.

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Whenever you apply for a loan or credit card, the lender definitely looks at your CIBIL report and your CIBIL / credit score. However, most people do not know their meaning properly nor do they know what is the difference between them.

There are four credit information companies in India – Credit Bureau Transunion CIBIL, Equifax, Experian and CRIF Highmark.

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These companies collect people’s financial records and generate a credit report / credit score based on this data. All four companies get this work license.

Credit or cibil score

  • The role of credit or CIBIL score is very important in the process of applying for a loan or credit card.
  • The CIBIL score is a measure of the credit rating of a person. It is three digits.
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How much CIBIL Score is considered good

  • The CIBIL score ranges from 300 to 900.
  • A CIBIL score of 300–579 is considered poor.
  • Up to 580-669 is satisfactory.
  • 670-739 is considered good.
  • 740-799 is very good.
  • A score of 800-850 is best.

Importance of CIBIL score

  • The probability of getting a loan is very less if the CIBIL score is low. The lender can also reject the application.
  • If the CIBIL score is high, the lender after deciding the application and its details will decide whether to grant the loan to the applicant or not.
  • CIBIL does not in itself decide whether a loan / credit card should be approved or not.

Cibil report

  • The history of a person’s credit payment is a CIBIL report.
  • The CIBIL report details how a person repays his debts in a given period of time.
  • Details of the person going bankrupt or repaying the debt also remain in the report.

What else does CIBIL report

  • How often did the person apply for a loan or credit card.
  • From which bank / financial institution did the person get a loan or credit card.
  • Whether loan or credit card EMI and bill paid on time.
  • Which banks / NBFCs investigated individual credit reports.

Read also:

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