Basically, CIBIL stands for Credit Information Bureau (India) Ltd. It is commonly known as Credit Bureau. It is the first credit information company of India. CIBIL collects records of payments done by individuals or entities to the credit cards and loans. This leads to the development of CIBIL score. Let us clarify this concept in detail.
You progress card of debts and liabilities
You earn profits and prepare statements such as Income statement or profit and loss account for your enterprise. Similarly, you also file returns to the taxation authorities for the individual income earned in a year. Then, what about the records of your personal loan, home loan and credit card payments? You must also be scored for the payments you make to banks towards the loans obtained. This task is performed by CIBIL. It collects records of individuals as well as entities relating to payments towards credit cards and loans. The collection of loan details is acquired by CIBIL from banks and other lending entities. Later, CIBIL prepares a Credit Information Report (CIR) on the basis of this analysis. A CIBIL score is developed. This CIBIL score is utilized by future lenders to evaluate loan applications. So, next time, when you apply for your second credit card, the bank will refer your CIBIL score first.
Your CIBIL score serves the first impression on the lender
The CIBIL score plays a significant role in the approval of loan applications. You desire to avail a personal loan. You fill out the application form and hand it to the lending bank. The lender first refers to your credit score as well as credit information report. In this case, your credit score must be high for obtaining loan approval. If your credit score is low, then your application is straightaway rejected. High credit score will show your creditworthiness and the lender will move further for processing the application. Thus, the lender enjoys the authority in processing of your loan application on the basis of status provided by CIBIL. It should however be noted that CIBIL looks after only the record maintenance of applicants. They do not advise the lender whether the loan should be approved or not.
To get a high CIBIL score
Here are some approaches to follow for getting a high credit score. Never make late payments or non-payments on loan EMIs. Do not spend excessive on credit card. Credit cards must primarily be used in the case of emergencies or while travelling. Do not go for all types of loans such as home loan, personal loan, and auto loan and so on. The list can be endless and with attractive offers by the bank. But lastly, it will affect your CIBIL score and your account balance.
Hence, individuals and entities are suggested to have a good credit history. When you are genuinely in need of money and need a loan, your high credit score will reflect your creditworthiness. Your loan application will definitely get approved with your good credit history.
