CIBIL Full Form Is Credit Information Bureau (India) Limited. When you go to take a loan from the bank, then the bank assesses your ability to repay the loan. If the bank is able to find, your ability to repay the loan, then the loan is given to you.
Along with this, the bank also checks whether you have repaid your old loan on time or not, for this, the report which he sees is called credit report or credit score.
A credit score indicates your ability to pay back your loan. Whenever you have previously taken a loan (home loan, personal loan, car loan, credit card loan, etc.), whether you have returned that loan at the right time or not, all these details are recorded in your credit score.
The bank cannot collect all this information on its own. That is why he takes this information from the credit information company, the companies that give credit information are also called credit bureaus, there are many companies in India in which CIBIL is the chief.
Now if you also want to take a loan, then you have to tell your credit score to the bank, earlier you had to pay a sum to check the CIBIL score, but now this service has been completely free, now you can check your credit score by sitting at home.
Why is CIBIL Credit Score important?
CIBIL plays a major role in the approval of a loan. If you don’t have a satisfactory CIBIL score, most of the banks may not consider you eligible for the loan. When you submit a loan application, the bank first checks your credit score and credit history. If you have a low credit score, the bank may conclude that you have a bad credit history and thus it may reject your loan application. On the contrary, if the credit score is good, the bank may easily approve your loan. So, the higher the score, the higher the chance that your loan will be approved.
Benefits of a Good CIBIL Score
- Eligible for Loan: CIBIL score decides your eligibility for a loan. A good CIBIL score makes you eligible for getting a loan easily.
- Discount on interest rate: If your CIBIL score is high, you may negotiate for the better interest rate for the loan.
- Faster loan approval: Loan approval will be quick and easy. The banks or lenders may offer you a pre-approved loan or a credit card without annual fees.
- Higher credit limit on credit cards: A good CIBIL score suggests that you are a responsible borrower and have been making loan payments consistently. So, you can get credit cards with higher credit limits easily.
- Loans with longer tenure: You can request for a longer tenure for loan payment, e.g., a 7-year car loan or a 25 year home loan.