Check Credit Score

You must have heard the term ‘Credit Score’, before! But, are you aware of the term in detail and how is it helpful to you. What are the different factors, involved in the determination of CIBIL and who calculates it and other important factors are associated with CIBIL. The DealsofLoan brings the detailed information on CIBIL and help in the analysis of CIBIL.

Know the term ‘CIBIL’

Credit score or CIBIL is an acronym for Credit Information Bureau (India) Limited. Established in the year 2000, this CIBIL is a three digit number, which is an indicative of a person’s credibility. The CIBIL is an indicative number, which determines the credit behavior of a person and thus can be considered as the marking system by the financial institutions as given to you. The more is the score, the better it is for your credibility.

How does CIBIL Impact you?

Since, the CIBIL Score is an indicative of a person’s behavior in financial aspects, it determines how much trustworthy, a person is when it comes to the money managerial skills. The highest score at CIBIL indicates, a person is having a good financial management and thus a person can be trusted, when it comes to the repayment of debts, etc. Similarly, a low score at CIBIL indicates a bad behavior of a person and thus raises serious questions on the financial credibility of a person. The result of good CIBIL Score is that the banks and other lending institutions welcome a person, for loans and other such without much of a hesitation and also offering a better chance to the person to negotiate on rates of interest from the lending institutions, while the person having a low CIBIL score, are most of the times avoided for loans and if any lending institution, still offer loans, the chances of the higher rates of interest being charged are more likely.

How CIBIL Score is calculated?

CIBIL Score has been calculated through the financial institutions and other lending unions. The credit bureau ‘CIBIL’ is solely responsible for the determination of the CIBIL Score of the person, based on the inputs as given by the NBFCs and Indian banks. Based on different factors, the Credit bureau generates a credit report, which can be offered to the person, either free or with the payment of a nominal amount. There are three different agencies, which carry out the task of the calculation of the CIBIL Score are CIBIL TransUnion, Experian & Equifaxand High Mark.

The factors & process in the calculation of the CIBIL Score are as laid below:

• As soon as you make a transaction, the bank sends the details of the transaction to these three agencies. Also, the sending of the details of the these three credit agencies has been made compulsory by the RBI and thus the sole responsibility of keeping these credit bureau agencies up to date, lies in the hand of the banks and financial institutes.
• After receiving information about your transaction details, the credit agencies start collecting other information about your financial habits from various other banks and financial agencies.
• After the collection of full information, the CIBIL Agencies proceed towards the formulation of the report called as CIBIL Score report, which is always updated once your credit history goes into the change.
• The banks can always approach any of the CIBIL agencies, if they need to check the Credit score of yours.

Calculation of Credit Score

The calculation of a Credit Score is primarily based on below factors:

• Credit card utilization: The way you utilize your credit card is one of the deciding factors in the calculation of a credit score.
• Payment history: The payment is just another factor, which determines how the credit score of a person will be. The timely payment of all dues and EMIs is a juice to the better credit score of a person.
• Age of credit lines: The age of the credit lines is just another factor for the calculation of a accredit score.
• Total number of accounts: The total number of accounts is an important factor in the determination of the credit score. Avoid keeping, too many accounts under your name.
• Entries for credit inquiries: If you are enquiring for the credits through the lending agencies, too frequently and also are being rejected, will negatively affect your credit score. Pay attention at this factor.
• Negative status account: Another deciding factor in the calculation of a Credit Score.

Why should you check your CIBIL Score on a consistent basis?

The DealsofLoan advise you to check your CIBIL Score on a consistent basis. Keep an eye on the Credit Score of yours to judge your performance in the eye of the financial agencies, and also keeps you updated if there is any wrong doing. By timely checking of your credit score, you can better analyze your credibility, and if you consider any error is being made by the credit agencies, you can notify the same to these agencies for reconsideration, thus keeping you ready for a better deal during the times of needs.

Is CIBIL the deciding factor while taking a loan?

While, many people have their opinion that CIBIL is the deciding factor while applying successfully for the loan; the DealsofLoan would like to inform that this isn’t true!

While, the CIBIL Score is one of the deciding factors while applying for the loan, successfully, this alone is not the deciding factor. There are many other factors, which comes to the prominence, when it comes to the successful application of the loan. The CIBIL Score is just an indication of the credit history of the person and helps the banks to decide whether to approve/disapprove the loan application. There are many in the country, which don’t have any CIBIL History, but still are successful in getting the loan, approved. Considered among one of the important factors, this is not only the factor, which is considered while taking a loan.