The Credit Score Game: Understanding a Good CIBIL Score - Loan Trivia


Full-Width Version (true/false)

Wednesday 14 February 2024

The Credit Score Game: Understanding a Good CIBIL Score

In India, four credit information agencies collect information on credit users and based on the information collected, each of these credit agencies assigns a credit score to these users. These agencies are TransUnion CIBIL, Experian, Equifax and CRIF Highmark. The credit score that TransUnion CIBIL assigns borrowers is known as the CIBIL score and the CIBIL score is the most popular among lenders. It is important to understand the significance of the CIBIL score. Lenders see this score as a measure of someone's creditworthiness and therefore, decide the terms and conditions of a loan based on this score. 

So, let us look at the different CIBIL score ranges and find out what is a good CIBIL score for loan applicants in India. 

CIBIL Score Ranges and What They Say About Credit Users 

750 to 900

A CIBIL score between 750 and 900 is considered excellent or very good. Credit users who repay loans and credit card bills on time, maintain a low credit utilization ratio and are not excessively dependent on credit have such a score. Such individuals find it quite easy to get approved for a loan. Lenders also show a willingness to lend money to such borrowers on the most favourable loan terms and conditions. Such a CIBIL score translates into low loan interest rates, higher loan sanctions and a loan tenor that is desirable to the borrower. Individuals planning to apply for home loan of any type must maintain a CIBIL score in this range. 

700 to 749 

While such a CIBIL score is not ideal, it also does not completely ruin one's chances of getting approved for a loan. Individuals who have been punctual with EMI and credit card bill due dates barring a few instances have such a CIBIL score. Such a CIBIL score could also be a sign of a borrower who has always paid loan EMIs on time but is excessively dependent on credit or someone who has only one kind of loan or a relatively new credit history. Such loan applicants get approved for loans easily but are not able to avail them on the most beneficial loan terms and conditions. They often find themselves agreeing to the loan terms and conditions that their lender decides. However, by making small efforts over a continued period, they can easily push their CIBIL score into the ideal category.

Below 699 

If your CIBIL score is between 600 and 699, it simply says that you are not the most reliable person when it comes to the repayment of debt. Therefore, lenders generally charge a higher rate of interest on loans availed of by individuals with such a credit score. If your CIBIL score is between 500 and 599, availing of a loan will be quite challenging. A lender may agree to sanction you a loan only if you add a co-borrower with excellent creditworthiness or buy insurance. If your CIBIL score is below 500, it is quite difficult that you will be able to avail yourself of a loan.

In this article, we have tried to give a broader idea of different CIBIL score ranges. If you are planning to apply for a loan, make sure you have a good CIBIL score, i.e. anything between 750 and 900. Such a CIBIL score will ensure quick loan approval as well as the best loan terms and conditions and make loan repayment easy for you.

No comments:

Post a Comment