Full Form of CIBIL – Credit Information Bureau of India Limited

Why is CIBIL Score Important?

  • CIBIL score, which is allotted to a borrower, reflects its creditworthiness. The score is considered by other financial institutionsFinancial InstitutionsFinancial institutions refer to those organizations which provide business services and products related to financial or monetary transactions to their clients. Some of these are banks, NBFCs, investment companies, brokerage firms, insurance companies and trust corporations. read more when the borrower approaches them for availing of other new loans.CIBIL is the most trusted credit rating agency. Banks and other financial institutions highly trust its database because CIBIL keeps it updated and reliable.The financial institutions refrain from granting loans to persons with low CIBIL scores, or even if they grant the loans, interest rates are kept higher for such persons. In contrast, a person with a good CIBIL score can easily avail of the loans and enjoy comparatively lower interest rates.

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How to Check the CIBIL Score?

You can check your CIBIL score by logging into the official website of CIBIL after filling in basic personal information. Once you log into your account, you will be prompted to make the payment. After making the payment, you can access your CIBIL score and get access to your annual reportsAnnual ReportsAn annual report is a document that a corporation publishes for its internal and external stakeholders to describe the company’s performance, financial information, and disclosures related to its operations. Over time, these reports have become legal and regulatory requirements.read more. If there is any discrepancy, one may approach the grievance redressal desk of CIBIL.

What are the Benefits of a Good CIBIL Score?

Having a good CIBIL score is important due to various reasons.

#1 – Ease in Availing Credits

It is easier for a person with a good CIBIL score to avail of loans and credit cards as financial institutions consider them creditworthy.

#2 – Lower Interest Rates

The interest rates are lower for persons who have a good CIBIL score.

#3 – Fast Approvals

Taking loans is a less cumbersome and faster process for those with a good CIBIL score as there is less paperwork.

#4 – Beneficial Offers

Credit cards with exciting benefits, cashback, and gifts are benefits only people with good scores get.

#5 – Higher Limits

Such borrowers can always negotiate for increased limits; normally, financial institutions do not hesitate to set higher credit limits for such clients.

Products and Solutions Offered by CIBIL

CIBIL provides the following products and solutions to its members.

#1 – CIBIL Score and Report

You can check your CIBIL score and get access to your detailed report to take corrective actions in the future. A higher CIBIL score gives you a higher chance of your loan getting approved.

#2 – CIBIL Rank and Company Report

CIBIL provides businesses to rank on a scale of 1 to 10. The rank nearer to one reflects a good record. CIBIL company record, on the other hand, is a complete summary of your company’s credit history and reflects how responsive the company is in repaying its loans.

#3 – Apply for a Loan

CIBIL provides an online platform for applying for loans and credit cards based on your requirements. You can compare interest rates, fees, credit limits, and other criteria of member banks and other financial institutions and then apply with the member which suits you the best.

What Factors Influence CIBIL Score?

Your CIBIL score is a result of various factors.

#1 – History of Credit Repayment

If one misses the due dates of payment and defaults in repayment of their loans and credit cards, that will negatively impact the credit score.

#2 – Limit Utilization

Utilizing higher levels of the limit will indicate to your bankers and other financial institutions that you are burdened with debt and may be unable to repay it on time.

#3 – Requesting for Increased Limits

If you frequently request an increase in limits, it will negatively impact your credit score.

#4 – Many Loan Applications

Make applications for loans and credit cards to various financial institutions simultaneously. Avoid filing unnecessary applications. It will give an impression to those institutions that you are not creditworthy and that other banks are not willing to give you loans.

#5 – High Unsecured Loans

Unsecured loansUnsecured LoansAn unsecured loan is a loan extended without the need for any collateral. It is supported by a borrower’s strong creditworthiness and economic stabilityread more are riskier and less reliable for financial institutions. A person with more secured loansSecured LoansSecured loans refer to the type of loans approved and received against a guarantee or collateral. If they fail to do so, the lending institution acquires the collateral to compensate for the amount that the borrowers were allowed.read more will have a better score.

Difference Between CIBIL Score and CIBIL Rating

As similar as they may sound, CIBIL Score and CIBIL Rating differ.

  • CIBIL Score is issued to individuals, while a corporate CIBIL rating is issued. CIBIL Score comprises three digits that range between 300 and 900. Ideally, any score above 750 is considered a good credit score for individuals.On the other hand, the CIBIL rating of companies is given on a scale of 1 to 10, one being the best and ten being the worst. A company can have a good credit score if its rating lies between 1 to 4.

Conclusion

Having a good CIBIL Score is very important. Thus, one should ensure to make repayments of existing loans and credit cards timely without a default; otherwise, the CIBIL score will decrease. It is important to check your score and access your report to analyze what led to that score and take steps for improvement.

This has been a guide to the Full form of CIBIL, i.e. (Credit Information Bureau of India Limited) and its definition. Here we learn how to check the CIBIL score, what factors influence the CIBIL score, why it is important, and its benefits. You may refer to the following articles to learn more about finance –

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