What Do Banks Look For In Your CIBIL Score?
CIBIL Report or CIBIL TransUnion Score has become the bane for many people across the country looking for loans. Every bank and financial institute assesses the CIBIL report of a person before approving the loan amount and it has become a crucial aspect of the loan approval process. CIBIL is not just used while approving loan, but also while issuing a credit card.
CIBIL Report / Score
This report is updated on a monthly basis, based on the payment history of credit cards and loans. CIBIL Score is a numeric value that lies between 300 and 900 and is indicative of a person’s financial and credit worthiness. The score calculated through advanced analytics is used by financial institutes to gauge the financial behaviour and seriousness of an individual. A person with a score closer to 900 is more likely to get a loan approved than one whose score is near 300. The cut-off score depends on the financial institute — however most banks lend to borrowers with a score of 750 and above.
But did you know that your CIBIL score tells a lot about you to the banks. So what does the CIBIL score tell about you?
Your credit exposure
- The number of loans you have taken so far
- The number of credit cards you have
- The total credit you have availed
- The type of loan availed – secured or unsecured
- The ratio of secured and unsecured loan
Your credit behaviour
- The settlements made on credit card bills
- The defaults on loan and the days by which defaulted
- The current status of loan
- The date of repayment of loans and bills
Your credit appetite
- Deferred repayments
- Number of times loan/bill payment was delayed
- The loans and bills to repay.
By comprehending what institutes look for in a person’s CIBIL report one can be better prepared before applying for a loan.
The CIBIL score not only determines whether a borrower qualifies for a loan but it also impacts the interest rate and the terms and conditions of the loan. A higher score guarantees favourable rates for the borrower.
Since the CIBIL score is essential for all types of loans, secured and unsecured, it is imperative to maintain a healthy score.
Improving CIBIL Score
- Pay bills on time: Whether it’s a loan or a credit card bill, pay it off on its due date. Payment history plays an important role in CIBIL report and regular timely payments will improve the credit score.
- Limit credit card spend: Higher credit card spending indicates higher repayment burden.