28-Apr-2017 written by : FSI-Team
Credit Bureaus such as CIBIL, Equifax, and Experian keep up to date information about your financial activities such as pending loans, credit card payments, etc. So, if you have ever taken a loan in the past or used a credit card, then it is likely there is a credit report under your name in at least one of the most popular credit bureaus of India, even if you are not aware of it.
Banks and other financial institutions refer to the credit reports managed the credit bureaus to estimate the creditworthiness of an individual, on the basis of which they make financial decisions. If you donâ€™t know how CIBIL score and CIBIL report works and how you can improve CIBIL score is itâ€™s not good enough, then you can learn about it all in this post.
CIBIL or Credit Information Bureau India Limited is the most popular credit bureau of India that records the credit-related information of all the individuals and provides them same to the financial institutions upon request.
CIBIL maintains your credit information in two ways- CIBIL report and CIBIL score. While the former contains the in-depth information such as your loan repayment history, instances of defaulting, pending debt, account information, personal information, the latter is a three-digit score that represents your creditworthiness.
The CIBIL score of any individual can be anywhere between 0 to 900, which are the lower and upper limits. Generally, a score higher than 750 is considered good. Anything lower than 600 is not considered satisfactory. In other words, if your score is lower than 600 then you can have a hard time getting a loan or a credit card when you need.
As per the new RBI guidelines you can now get a free cibil score from CIBIL once every year. Previously, applicants had to pay a small fee for the same service. So, today you can just go to CIBILâ€™s official website and get a free credit score by filling out a form and providing some other details. This can help you get an idea of whatâ€™s your score at.
When you are young and have just got your first job, your financial responsibilities are few. You donâ€™t have your own family yet, and thus there are limited expenses. This is one of the reasons why young professionals donâ€™t find it difficult to get a personal loan to fulfill their desires such as buying a new car or a new house. However, this is also a critical point in your life as this is where CIBIL becomes active.
The day you get your very first personal loan your credit history is created. From this point forward every single move made by you regards to your credit usage affects your CIBIL score. While you may not realize the importance of your CIBIL score now, as you just have one personal loan, in future, you may face difficulties if your score drops below average. Thus, itâ€™s important to manage your personal loan wisely.
The following are some of the reasons why you must pay attention to your Credit Score:
If you want to ensure your score stays good then make sure you do/don't the following:
If you want to learn more about how the credit system works and what are some of the things you should learn beforehand then you can get in touch with a Credit Sudhaar representative. They will answer all your queries.