CIBIL means Credit Information Bureau of India and credit Information Company which was established in the year 2000. This CIBIL records the credit information of every borrower in the country. The main duty of this CIBIL is to maintain information related to loans and credit cards of every individual and providing same to all financial institution across the country. CIBIL help every bank and financial institutions to be aware of a person’s credit history before they sanction a loan. CIBIL helps every bank and financial institution by warning them before hand about person who hasn’t paid loan EMI or credit card payment outstanding.
How credit score is calculated?
Based upon late payments and defaults, loans and credit cards that you are holding, and your diligence in paying credit cards EMI and loans and number of loans you have applied for and number of loans you have paid. These are all things CIBIL consider to calculate credit score of yours and provide same information to various banks. Based upon such score of person banks decide whether to approve a loan or not.
How things work?
Before approving a loan to a person or offering a person a new credit card it’s important for bank to check the credit score and repayment information of that particular person. Why bank and financial institution needs to collect this kind of information before they approve a loan? The main reason is to alert every bank by giving information about the person who has bad credit score because he is the person who has failed clearing previous dues. Banks depending upon such credit information offers loans and new credit cards to a person just to be on safe side. If a person has bad credit score then he cannot get a loan or a credit card. There are many people who deceive banks by not paying the loans and EMI’s of credit card.
It is important for every individual to improve credit score and also maintain good credit score. One should be paying all credit card dues and loan EMI amounts on time to avoid bad credit. With bad credit and repayment history it would be very difficult for a person to apply for new loan or apply for new credit card. Your bad credit score affect all kinds of loan whether it is home loan, personal loan or vehicle loan.
Since credit score plays very important role for getting loans approval one should maintain and improve credit score. By paying all payments loan and credit card EMI’s on time. This is one best way you can apply for any kind of loan without any complications. Try to control your impulse usage of your credit cards. Not paying the dues on time can eventually lead to bad score and your new application for loans will be rejected undoubtedly. One should never forget to improve credit score for successful loans approval.