Everything you need to know about CIBIL score

Your CIBIL score is the significant number that every bank and NBFC lender checks before sanctioning a loan for you. If you expect hassle-free approval for all your loan applications, then you should maintain a healthy CIBIL score. The CIBIL score is the measure of creditworthiness of an individual decided based on the previous loan repayment history of the individual.

CIBIL Score

The CIBIL score is a three-digit number that acts as a measure of creditworthiness of an individual. This creditworthiness is decided based on the previous loan repayment history of the individual. A loan defaulter will have a low CIBIL score, while an individual paying back the loan installment properly will have a high CIBIL score. The CIBIL score helps lenders and banks to determine your probability of repaying the debt on time.

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How is a CIBIL score calculated?

Your CIBIL score is calculated based on following factors:

Payment history

Payment history is the record of your previous loan repayments and it shows whether you have paid your loan’s monthly installments on time. If you have frequently defaulted on your monthly loan payments in your previous loans, it will reduce the probability of your new loan being sanctioned.

Credit utilization

Credit utilization is the amount of credit you are utilizing compared to your maximum credit limit. Having a high credit utilization rate will impact your CIBIL score negatively.

Why is a good CIBIL score important?

Having a good CIBIL score not only helps in instant approval of your loan application, it also helps you to get a loan with relatively lower rate of interest.

  • Pay your credit card bills and EMIs on time
  • Reduce your credit utilization
  • Check your credit report for errors
  • Avoid opening too many new credit accounts

A good CIBIL score indicates that the customer is creditworthy. However, each lender has their own criteria to approve your loan application. Check your CIBIL in Cholamandalam.com