What is Credit Score or CIBIL and How it works ?

what is credit score

This post would educate about the basics of credit score, what exactly it is and how it works.

Credit Information Bureau (India) limited is a credit bureau which provides the credit related activities information of individuals and companies.

The records are
submitted to CIBIL by registered member banks and other financial institutions
on a periodic (usually monthly) basis. Based on this data, CIBIL issues a
Credit Information Report or CIR (commonly referred to as a credit report) and
a credit score.



CIBIL has two focus
areas: A Consumer Bureau that deals with consumer credit records and a
Commercial Bureau that deals with the records of companies and institutions.

It is important to
note that CIBIL is a database of credit information. It does not make any
lending decisions. It provides data to banks and other lenders who use it as a
quick and efficient resource to filter loan applications.

This report can be
accessed by individuals on the basis of request made directly through CIBIL
website on making payments. Any individuals can also check their credit score
from any of the websites that are offering free credit score check.

Credit score is
a three digit number maximum of 900 which gives a indicator of an individual
credit worthiness based on one past payment track record, their paying habits.
More the score is nearer to 900 better for an individual to get loan approval
and also good loan amount.

Better score
also gives an individual to bargain for interest rates as all the banks will
look forward for having good customer to their portfolio. Any score more than
650 is considered good below 650 is not so good.

Disciplined and
without default payment history for credit card spending, loan EMI’s , Post
paid bills makes one credit score healthy nearer to 900 which gives them a chance
to get good loan amount at good interest rates which other individuals may not
get it.

Remember this is one of the parameters looked upon by banks , institution when they are making disbursement of loans.

Director Sales | Corporate Finance Adviser | Finance Consultant | LevensLoop

Seasoned Market Savvy, Strategy-conscious and Customer-focused Senior Sales Professional with 13 years. Extensive experience of exceptional Sales, Credit, Managerial and Administrative abilities in strategizing and expanding the business.

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