Why Is Your Cibil Score Important?
When you approach a bank to fund your home purchase, you are often puzzled because a bank executive starts probing your credit score before proceeding. You may not have given it much thought, but your punctuality in paying your bills – credit card bills, equated monthly instalments (EMIs) for your automobile loan, and many other such liabilities – has a bearing on whether a bank approves or rejects your loan.
PropGuide tells you how financial institutions evaluate your credit score and things that you must do to keep your rating high.
What is Cibil?
The Credit Information Bureau (India) Limited, or Cibil, is an agency that provides the credit score and report on an individual's payments pertaining to loans and credit cards. In other words, it's a record of how you treated your liabilities. Your Cibil score shows your creditworthiness and indicates the probability of a default on the basis of your credit history.
How does Cibil get these records?
Cibil sources all your credit information from leading banks and other financial institutions. These data keep getting updated from time to time.
How to interpret your score?
Before giving you a rating, Cibil takes these factors into account:
What kind of scores do you see on your credit report?
700+ (No-risk zone) : A score above 700 is considered good and helps you secure a loan easily.
600-700 (Less-risky zone) : A score in this range will help you borrow from lenders. However, to ascertain your creditworthiness, banks will check various other factors like sources of income other than your regular one, the stability of your job, etc.
300-600 (Risky zone) : A score between this range is considered risky by banks and they refrain from funding people in this category.
1-5: This range reflects under six months of credit history.
-1: This credit score reflects there is no credit history.
How to score high?
Follow these steps to keep your Cibil score high:
What may drag your score down?
Avoid the following to maintain a high credit score:
With inputs from Parul Pandey