Why is your CIBIL Score Important

Many banks, NBFCs, and various other financial institutions offer loans and credit cards without any collateral. These credit products are approved when the applicant has a good credit score.

You can visit the TransUnion CIBIL official website and get your CIBIL score. Maintaining a good CIBIL score increases your chances of getting loans easily and at relatively lower interest rates. Let us know in detail all about the CIBIL score and its importance.

What is the CIBIL Score

Credit Information Bureau of India Limited (CIBIL) issues an applicant with a credit score (CIBIL score in this case) that denotes the creditworthiness and ability to repay the loan on time.

CIBIL is a three-digit number calculated based on the applicant’s financial history. The CIBIL score ranges between 300 to 900 and people having a higher score have better chances of getting loans approved.

Your CIBIL score is determined by many factors such as your payment history, types of credit and number of loan accounts, credit history, opening and outstanding loan amount, etc.

Different banks and financial institutions have different benchmarks for issuing loans to applicants. As per CIBIL’s analysis, most of the loans approved are for those individuals who have a score of 750 or more.

Steps for Checking Your CIBIL Score

Follow the steps below to check your CIBIL score at Paisabazaar:

Step 1: Visit the Paisabazaar official website or click here

Step 2: Enter the following personal details:

• Gender (Male/Female)
• Full Name
• Email Address
• Mobile Number

Additionally, you have to provide,

• PIN Code
• Date of Birth (DD-MM-YYYY format)
• Permanent Account Number

Step 3: Enter the OTP sent to the mobile number in the pop-up screen

Step 4: Now, tick mark the checkbox to provide Paisabazaar with the authorization to receive your credit information from credit bureaus

Step 5: Click on the “Get Free Credit Report” button

Step 6: Your credit score will appear on the screen

Importance of CIBIL Score

A CIBIL score is important because it helps in the following ways to both the lender and the borrower:

• CIBIL score helps the borrower to know his creditworthiness. A person who manages his finances well will always have a higher CIBIL score.
• A lower CIBIL score signifies that the applicant has low creditworthiness and banks refrain from giving loans to such applicants
• If the person has a very good CIBIL score, the institution may grant him a loan at a lower interest rate and with minimum paperwork.
• If the CIBIL score of the applicant is very low, banks either do not approve the loan application or grant the loan at higher rates of interest.
• However, only CIBIL score is not the only criterion that decides whether banks would grant the loan to the applicant or not
• Various other factors help these organizations decide the approval of the loan application of the applicant. However, the CIBIL score of the applicant plays a major role when banks offer the interest rate.
• An applicant having a higher CIBIL score may get a loan at a lower rate of interest whereas an applicant having a lower CIBIL score may get a loan at a higher rate of interest.

Advantages of Your High CIBIL Score

A good CIBIL score ensures that you get several advantages over those having no CIBIL score or a lower score. You are entitled to the following advantages if you have a good CIBIL score:

• Easy Credit from Lenders: A good CIBIL score helps you get loans and credit cards from lenders quite easily as your good credit score raises hopes of lenders that you will easily pay back your loans on time
• Quick Approval of Loans: A good CIBIL score states that you are a good prospect to lend money. Thus, banks try to give you the loan as early as possible. People having lower credit scores have to furnish several documents and find guarantors making the loan disbursal process a bit time-consuming
• Low-Interest Rate Loans: People with high CIBIL scores get loans at a relatively lower rate of interest. Those having a lower credit score are granted loans at higher rates of interest
• More Negotiation Authority:  If you know your CIBIL score is very high, you have the negotiation authority to bring down your interest rate
• Higher Approval Limits: If your CIBIL score is high, you not only get loans at a lower rate of interest but also have chances of getting the upper limit of loans
• Easy Approval for Leased/Rented Properties: People having a good credit score get easy approval for loans even for rented or leased properties like homes, commercial complexes, or apartments
• Exclusive Credit Card Offers: People having a good CIBIL score get exclusive credit card offers from many banks. These cards may have higher limits, more privileges, and special offers and cashback

How Does CIBIL Score Matter

CIBIL score matters a lot in the Indian Financial System where almost all banks and NBFCs are dependent on it for loan approval and disbursal. Your financial life depends highly on your CIBIL score.

It does not matter how smartly have you planned your finances, financial emergencies can emerge anytime and you may have to apply for loans. It is then when the CIBIL score would matter a lot. Below-mentioned are facets that are influenced by your CIBIL score:

• Approval of Credit – Banks and NBFCs approve credits based on your credit score. Having a higher CIBIL score will increase your chances of getting approvals easily.
• Rate of Interest Offered – The rate of interest offered by the bank can be lower for those having a high CIBIL score.
• Types of Credits – People having a higher credit score get a wide range of credit card offers from various credit card providers which are not offered to people having a lower credit score.

FAQs

Q. What is the ideal CIBIL score you should have? 

Ans. An ideal CIBIL score for loans or credit is generally any score between 700 and 900. A good score ensures a higher chance of your loan application getting approved.

A score above 750 is considered favourable if you want to avail a personal loan, home loan, car loan, or credit card.

Q. What are the charges for checking CIBIL score through CIBIL?

Ans. One CIBIL score and report is provided by CIBIL without any charge every year. For monthly updates, you may have to pay a huge amount every time.

If you check your CIBIL score through Paisabazaar, you get a free credit report every month for lifetime.

Q. My CIBIL score is 680. Are there any chances that my CIBIL score can be improved?

Ans. Yes, you can improve your CIBIL score by keeping the following things in mind:

• Paying your dues on time
• Keeping your credit utilization ratio low
• Maintaining a healthy credit mix
• Regularly checking your credit report
• Keeping your old accounts active

Q. How is the CIBIL score calculated?

Ans. CIBIL score is calculated by keeping various factors in mind such as repayment history, credit utilization ratio, multiple credit enquiries, credit mix, and more.

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