The term CIBIL is majorly used when we talk about loans that are granted by banks or other financial institutions to the borrowers. The CIBIL full form is – Credit Information Bureau India Limited. This term is used by the banks to check borrower’s history and see whether the borrower will be able to repay the taken loan or not. This is done by checking the past credit history of the borrower.
The range under which the CIBIL score lies is between 300 to 900, but there is no ideal CIBIL score in between this range. However, the more the CIBIL score is, the better it is considered. A prospect individual increases the chances of loan approval if he/she has a higher CIBIL score.
Let us take an example to understand this, if a person has CIBIL score 700 and other has score 750 and the bank has to choose between these two, then the bank will select the borrower whose CIBIL score is higher and in this case, it is 750.
CIBIL takes many factors in the account before finalizing a definite score, therefore, factors such as timely repayments of the installment of loans, not using credit card limit frequently, etc. are some of the factors that improve the CIBIL score of a person. On the other hand, factors such as delaying the payments of loan installments, having more than one loan accounts, etc. are lead to lower the CIBIL score of a person.
It is clear from the above example that CIBIL score is most important especially when one is thinking to take a loan from the bank. This is because a CIBIL score is viewed as a good thing by the banks and other financial institutions who are lending money. Therefore, it is recommended to keep the factors that improve the CIBIL score in mind and avoid all the negative factors in order to avoid loan rejection because of poor CIBIL score.