Cibil Score: What should be the CIBIL score to take a loan, this is how it is calculated..


If you have ever taken a loan before or are about to take a loan, then you must be aware of the importance of the CIBIL Score. CIBIL Score is also called the Credit Score. By looking at the CIBIL score, banks decide whether a loan should be given to a person or not. CIBIL score ranges between 300 to 900. Generally, a CIBIL score of 750 or above is considered good. But do you know on what basis your CIBIL score is calculated and who prepares it? Let us tell-


  Loan Repayment History
If you have ever taken a loan before or used a credit card, your repayment history is checked. That means whether you pay EMI on time or not, it affects your CIBIL score. Paying loan EMI on time increases your CIBIL score and not paying it decreases.

Credit history
Your credit history starts building from the moment you take a loan or a credit card for the first time. While preparing a CIBIL score, your credit history is also considered. How old is your credit history and whether you made timely payments after taking a loan before or after using a credit card, all these things are seen. This credit history also affects your CIBIL score.

Credit utilization ratio
The percentage of your credit limit that you use is your credit utilization ratio. Use only 30 percent of the credit card limit. Avoid making very big purchases through credit cards. A high credit utilization ratio shows that your dependence on credit cards is very high. This affects your CIBIL score.

Credit mix
Your credit mix comes from how many unsecured loans and how many secured loans you have taken earlier. For example, if you have taken unsecured loans like personal loans, credit cards, etc. many times in the past, then it shows that you are short of funds and your dependence on credit is very high. This hurts your CIBIL score. At the same time, if you have been taking both secured and unsecured loans when needed, and have paid all of them on time, then it shows that you are capable of managing all types of loans. In such a situation, your credit mix remains balanced and your CIBIL score improves. This is the reason why most experts refuse to take unsecured loans more often.

Other reasons
Apart from these, your CIBIL score is also calculated based on some other things like wrong information in your credit report, whether have you ever done a loan settlement before, whether you are the guarantor of someone's loan and it is not being repaid, etc. All these also affect your CIBIL score and can spoil your score.


Who prepares the CIBIL score?
All credit bureaus release CIBIL scores. Among these, credit information companies like TransUnion CIBIL, Equifax, Experian, and CRIF Highmark are considered prominent, these companies are licensed to collect financial records of people, maintain them, and generate credit reports/credit scores based on this data. These credit bureaus evaluate the customer's data deposited with banks and other finance institutions such as outstanding loan amounts, repayment records, applications for new loans/credit cards, and other credit-related information, etc., and prepare the CIBIL score based on that.

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