Credit scores are created by taking information from credit reports and analyzing that data to forecast how someone is likely to behave in the future. CIBIL Score and Report is one of the most important factors that affect your loan approval. It represents a three-digit numeric summary. This can be derived using the credit history found in the CIBIL Report (also known as CIR i.e Credit Information Report). It does not contain details of your savings, investments or fixed deposits.
Your credit Cibil score is an important factor that lenders look at while evaluating a loan application. Hence it’s important to understand how the score is calculated. While there is a proprietary algorithm that determines your CIBIL score, the most vital elements of the score composition are based on an individual’s loan payment behavior. It is derived by using details found in the ‘Accounts’ and ‘Enquiries’ sections on your CIBIL Report.
If the CIBIL Score is low, the lender may not even consider the application further and reject it at that point and if it is high, they will look into that applicants and consider other details to determine if the applicant is credit-worthy. This works as a first impression for the lender. The decision to lend is solely dependent on the lender and CIBIL does not in any manner decide if the loan/credit card should be sanctioned or not.
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Lower than 750, it is considered as a low CIBIL score. Banks generally do not sanction personal loans of people with a low CIBIL score, or even if they do, they may charge a very high rate of interest.
Loans have made our life easier, providing us the financial leverage that extends beyond our earnings. Be it Credit Card, Home Loan, Personal Loan or Auto Loan, etc. Loans are the credit extended to us by lenders on fulfilling certain key parameters. However, getting a loan in India can often be a tedious process for the uninitiated, but not for individuals with a good credit score.
CIBIL defaulters is not easy to avail loan from banks and lending institutions. The chances of getting loan approval are low in case of a consistent defaulter. However, people can still get a personal loan despite having a low CIBIL score.
The scores are not negatively viewed by the lender, some credit policy of the lender’s prevents them from providing loans to an applicant with Scores of ‘NA’ or ‘NH’ (applicants with no credit track record). So, the people or lenders have better chances of applying for a loan elsewhere.
Scores are calculated when they are created based on the information available at that time. Whenever you apply for a loan, banks check your CIBIL Score and Report to evaluate your credit history and creditworthiness. The higher your score the better are the chances of your loan application getting approved.