A credit score is fast turning out to be an important number for a person today. In India, the credit score is also called as the CIBIL score since CIBIL is one of the top companies that provides credit scores to people. The procedure on how to check CIBIL score is very simple. You need to visit the CIBIL website and follow their instructions on finding the CIBIL score. You can even request for a credit information report which contains a detailed report of the credit information. This credit information contains items like:
- Outstanding loans
- Types of loans
- Repayment of credit card debt
- Repayment of outstanding loans
- Loan applications made
This information is condensed to form the CIBIL score. The calculation is a weighted calculation based on all these factors.
It is very essential to have a good CIBIL score. Generally, a score of over 700 is considered to be a good score.
Here is why it is important to have a good credit score:
- Buying a house:
When you buy a house, even though it is a secured loan, the lender needs to have comfort on whether you can repay the loan. Apart from income, this information will reflect in your CIBIL score. If you have a good repayment history, it will give comfort to your lender that you will repay your loan instalments in time.
- Starting a business:
A business requires loans for expansion and growth. However, the personal credit history of the loan applicant also matters with regards to composition of credit and can give hints to the personal financial situation. This can help the lender decide whether to lend to the person or not.
- Taking a personal loan:
A personal loan is an unsecured loan. Lenders do not ask for collateral in these cases. For such loans, the CIBIL score becomes an important indicator of whether the loan applicant will be able to repay the loan. A credit score of 700 and above can work in your favour when you make a loan application.
- Opting for credit cards:
When you opt for a new credit card, your credit score will be extremely important. The credit information report contains important information about existing credit cards and existing repayment history for the credit cards. This information is important for the credit card issuer.
- Negotiating with lenders:
A good credit score will give you leverage to negotiate with lenders. This is extremely important because then you can negotiate to reduce or waive off charges like loan processing fees. Having a good credit score can also give you a chance to negotiate for your preferred loan tenure.