CIBIL Credit Score – Benefits of a high credit score : Credit Information Bureau (India) Ltd, commonly known as CIBIL, is India’s first Credit Information Company or Credit Bureau which maintains records of all credit-related activity of individuals and companies including loans and credit cards. TransUnion CIBIL Limited was incorporated in 2000 based on recommendations made by RBI Siddiqui Committee with an objective to bring greater efficiency and transparency in the credit space. TransUnion International (a global credit bureau) and Dun and Bradstreet (a global provider of credit information) are technical partners of CIBIL in India.
Credit Information Report (CIR)
Credit Information Report or CIR is a record of all credit related activities that are submitted by registered member banks and other financial institutions on a periodic (usually monthly) basis. CIR reflects your current loans, past loans, credit card, repayment history.
What is a CIBIL Credit Score ?
A CIBIL Credit Score is a three digit numeric number that represent your credit worthiness. The score is calculated on the basis of credit history found in Credit Information Report (CIR).
A CIBIL score ranges from 300 to 900. Generally, a score above 750 is considered good. Higher the Credit score, more is credit worthiness. CIBIL score is used by banks / credit institutions to check your credit worthiness when you apply for credit facilities. Low CIBIL credit score lead to rejection of your credit /loan application with bank or any financial institution.
What are Benefits of a High Credit Score ?
- Quicker Loan Sanction : When you apply for Loan with a credit institution, lender will check for your credit worthiness on the basis of credit score. High credit score above 750 signifies that you have good repayment history. So, there is a chance that your loan application will be sanctioned quickly.
But if you have low credit score, lender may reject your application even if you have good repayment capabilities.
- Fast Disbursal of Loan : After Quick Loan Sanction, Loan disbursal will also be fast.
- Low Interest Rates : High score enables you to negotiate on interest rate, you can bargain for low interest rate. Banks also like to do business with customers with high credit score. They can also offer concession in interest rate on loan if you high credit worthiness.
- High Loan Amount or Credit Card Limit : Bank also offer high loan amount and credit card limit if you have good credit score.
- Long Repayment Period : With High credit score / worthiness, you get loan for long tenure as lender is sure that loan amount will be repaid.
So, now you are aware about benefits of a high credit score. In our next article, we will read on how you can improve your credit score to reap these benefits.