CIBIL score is a numerical evaluation of your creditworthiness. It is expressed as a three-digit number that ranges from 300 to 900. The CIBIL score meaning is Credit Information Bureau India Limited which is a recognised agency authorised to provide a credit score. It is strongly advised to do a free CIBIL score checking from an authorized source before applying for a loan. You must download your CIBIL report and review it to make informed decisions about your loan application.
Free CIBIL score checking is offered by CIBIL and other financial institutions such as Bajaj Finserv Credit Pass services that allow individuals to check their CIBIL score. Bajaj Finserv Credit Pass services is designed to help individuals understand their credit history and make informed financial decisions. By Free CIBIL score checking, individuals can identify any errors in their credit reports and take steps to improve their scores if necessary.
How does it work?
In India, the CIBIL score is expressed as three-digit numbers ranging from 300 to 900. This score is categorized into different groups: a bad score is below 550, a poor score ranges from 550 to 649, an average score ranges from 650 to 699, a good score ranges from 700 to 749, and an excellent score ranges from 750 to 900. Before applying for a loan, obtaining a Free CIBIL score checking from an authorized source is highly recommended. However, these categorizations are only approximate and may vary.
1. Bad CIBIL score
A low credit score can negatively impact an individual’s ability to secure a loan. If you have a bad credit score, it can be challenging to obtain a loan, especially if you need a large amount. In these situations, it’s important to adopt responsible financial practices before applying for a loan.
2. Poor CIBIL score
A poor CIBIL score indicates an individual has a history of delayed loan repayment. This is considered a high-risk factor and may reflect an inability or likelihood of delayed repayment. To improve your credit score, it is recommended to first repay any outstanding loans before applying for a new one.
3. Average CIBIL score
An average CIBIL score is considered neutral, neither good nor bad. Improving your credit history by consistently making timely payments can increase trust in your creditworthiness. With an average CIBIL score, loan approval may still be possible, but with a higher interest rate and limited additional benefits.
4. Good CIBIL score
A good credit score is considered an improvement over an average score but still needs to improve the confidence level offered by an excellent CIBIL score. With a good score, the likelihood of loan approval increases significantly. Improving your credit score even further could result in obtaining a loan with a favourable interest rate. One way to keep track of your credit score is to take advantage of the free CIBIL score checking services like Bajaj Finserv Credit Pass services.
5. Excellent CIBIL score
Maintaining a CIBIL score between 750 and 900 is recommended, as it shows a history of timely loan and credit card repayments. Individuals with an excellent CIBIL score are viewed as low-risk borrowers and are eligible for the best interest rates on approved loan amounts.
Importance of a CIBIL Score
1. Creditworthiness
A good credit score, also known as a CIBIL score, establishes an individual’s reputation as a reliable borrower. A high score indicates that they have demonstrated consistent and responsible behaviour regarding credit utilization. This shows they have been prompt in making repayments on time and can manage their credit obligations efficiently.
2. Credit or Loan Approval
A good CIBIL score reflects your creditworthiness, and lenders will be more confident in lending you money. They will better understand your credit history and how responsible you have been in repaying previous loans or credit card bills. This makes the lending process smoother and more favourable for you. A low CIBIL score can make the loan approval process easier and take longer to get approved.
3. Attractive Interest Rate
Lenders use the CIBIL score to evaluate the risk associated with lending money to a particular individual. If an individual has a good CIBIL score, they are considered to be a low-risk borrower. As a result, they are eligible for the best interest rates offered by banks and other lending institutions. If an individual has a poor CIBIL score, they are considered a high-risk borrower and are offered higher interest rates. It is important to regularly check your CIBIL score to ensure that it accurately reflects your credit history. This can be done through various free CIBIL score checking services available online by Bajaj Finserv.
Conclusion
The CIBIL score is a crucial aspect of an individual’s financial life in India. It is a three-digit number that summarizes one’s credit history and repayment behaviour and helps determine their creditworthiness. Free CIBIL score checking is based on data collected from various credit institutions, such as banks and non-banking financial companies, and ranges from 300 to 900. A higher CIBIL score indicates a better credit history and a lower risk to lenders, leading to better loan terms, lower interest rates, and quicker loan approval times. Therefore, individuals need to understand their CIBIL score, maintain a good credit history, and monitor their credit reports regularly to maintain a healthy financial profile.