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.
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.
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.
- 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.