There are a large number of people in the country who avail loans to meet their long term or short term financial goals. From catering to your educational needs to meet your business needs to buy a house, there are several reasons an individual opts for a loan. These loans are approved by the banks only when they maintain a good credit score. CIBIL score is an essential factor in determining the credit score of the loan applicant. By keeping a good CIBIL score, one can easily avail loans at comparatively lower interest rates.
What is CIBIL Score?
CIBIL stands for the Credit Information Bureau of India Limited. It is a three-digit number that expresses your credit history to the banker or lender. This score is an essential factor that decides whether you will be approved of the Loan or not. The Cibil score range varies from 300-900. All calculations regarding your credit score are made based on the credit report from where the banks can access the credit history of the borrower. Having a good credit score implies that you have a high CIBIL score and, therefore, increases your chances of easy loan approval.
Ways in which CIBIL score can affect your loan application
There are several ways in which the CIBIL score can affect your loan applications. Some of them are:
Quick Approval of Loan
The time taken for approval of the Loan depends on your credit score. High CIBIL score ensures speedy support of the loan approval of the borrower. It is because a high CIBIL score increases the confidence in the bankers and makes them take minimum time in processing the loan approval.
Lower rates of interest
When you apply for a loan with a high CIBIL score, there are high chances that the financial organizations will lend you the money at a comparatively lower rate of interest. He can also have the power to negotiate with the lender regarding the interest rates owing to his high CIBIL score. Also, the lenders often waive off the prepayment and foreclosure charges when the loan applicant has a high CIBIL rating.
Easy Loan from the lenders
CIBIL score has a significant role in your loan application. It helps the lender to decide whether to grant you a loan or not. It is the primary parameter that your lender checks when you apply for a loan. Based on your CIBIL score, the lender analyses whether you will be able to repay the Loan or become a defaulter. Therefore, when a person with a high CIBIL score approaches the lender, it becomes easier for him to avail the Loan than an applicant with a low CIBIL score. Moreover, you can also avail of a pre-approved loan if your CIBIL scores are high.
When you have a high CIBIL score, you can ask your lender to adjust the tenure according to your needs. There are high chances that the lender will approve the Loan along with the loan tenure you asked for.
Benefits of Having a High Cibil Score
Having a good or high cibil score can turn out to be very advantageous in many ways :
Let us look at the points :
Faster Approval of Loans
Easy Issue of Credit Cards
Avail Credit Cards with higher credit Limit
Ease in Loan processing
Credit Cards with more Limits
Take care of these four factors to ensure a good credit score :
- Payment History: 30 %
- Credit Exposure: 25%
- Credit Type and Duration: 25%
- Other Factors: 20%
Let us understand the entire concept and the role of CIBIL SCORE in terms of loan sanctioning once you have filled the application. After that, the lender undergoes a check. The first thing on which everything else depended is the cibil score check and the validation of the credit report. Having a low cibil score can lead to rejection of your application. In case the cibil score is high, and as per the requirement, the lender will consider it and proceed further. The cibil score is the first and last impression on which the entire game depends. Well, you must note one thing, even if the cibil is duly checker, the final authority to approve the loan solely depends on the lender.
CIBIL score plays a vital role in your loan application. Not having a good CIBIL score may result in rejection of your loan application or late approval, even if you have provided all the necessary documents to your lender. A Timely and regular cibil score check is also crucial. Therefore, to make sure you can avail of all the benefits associated with a high CIBIL score, you need to keep your CIBIL score right.
As a result, always remember to clear your dues on time, keep your balance low, review your credit history, maintain a healthy mix of credit to maintain a good credit score.