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If you go to any bank to take a loan or credit card, then the bank or financial institution first sees your CIBIL score. How much loan will be available at what interest from the bank or financial company, it depends on how good your CIBIL score is.
Simply put, the higher the CIBIL score, the lower the interest rate, the easier the loan will be available. It is difficult to get a loan when it is bad and even it will be available at expensive interest. The CIBIL score report contains all your personal information, job details, bank accounts and old loan details. Insurance companies also see this score nowadays. The CIBIL score ranges from 0 to 900.
cibil score good/bad
550 too bad
550-650 bad
650-750 average
better than 750
750-900 best
For business entities, the CIBIL score ranges from 1 to 10. One is considered the best, while a score of 10 is considered the worst.
If till date you do not have any loan history or you have not taken loan from any bank or NBFC or fintech company then your CIBIL score will go below zero. If you make regular loan repayments on time, then the CIBIL score will be 750 or more.
These four agencies prepare the score
RBI has authorized four agencies to collect information related to CIBIL score. Cibil, Experian, Equifax and Highmarks. These institutions collect information, including taking loans, repaying loans from various sources like banks, NBFCs, fintech companies. Based on these, CIBIL scores are prepared.
- Institutions also see how many times you have inquired with banks or financial institutions for taking loans.
- The auditor for the business organization also collects information like pending cases in court.
- Pay the loan on time. Make proper arrangements for not missing the installment.
- Do not take more than 30 per cent of your earning as a loan.
- Do not apply for the loan again and again and do not approve anyone for it.
- Take loan as per need. Don’t take loans because of tempting offers and attractive interest.
- Take a loan for a long period. This will also reduce the installment, which will make payment easier.