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Importance of CIBIL Credit Report

Importance of CIBIL Credit Report

July 9, 2022
5 min read
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Importance of CIBIL Credit Report
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Lenders want to know that you will repay the money you borrow before they provide you with credit. They may look at certain credit related information about you, such as your credit accounts, to help them estimate the risk of giving you money. Your CIBIL credit report contains all this important information that will help lenders gauge your creditworthiness. 

Lenders have a legal obligation to lend responsibly. This means they must determine not just whether or not you will repay the money you borrowed, but also whether or not you can afford to repay whatever you have borrowed. This would be unaffordable if someone needed to cut back on critical living expenditures to repay the new credit they were taking. Your CIBIL credit report might also assist lenders in determining how much credit you can afford. 

What is a CIBIL Credit Report?

Your credit score is reflected on your credit report. A CIBIL credit report is a document that has all the details of your financial history. It shows whether you pay your bills on time, how much debt you owe and to whom, how many times you have applied for loans or credit cards, and whether you have ever missed a repayment. The four major credit reference organisations, CIBIL, Equifax, Experian, and CRIF High Mark, generate information for your credit record. These agencies receive information about your money from banks, and lenders. 

Your CIBIL credit report is prepared by Credit Information Bureau (India) Limited. It generates a credit report and a credit score depending on the financial information about you. This information includes your loan and credit card payment history. The CIBIL credit score and report are calculated based on the reports and data sent by banks and other financial institutions. 

Why CIBIL Credit Report is Important?

Your CIBIL credit report can have an impact on any credit or loan applications in the future as well as present credit arrangements.

  • If you apply for a new credit card or a loan, your CIBIL credit report may have an impact on the type of credit product or service you may acquire, the amount of credit you can get, and the interest rate the lender may offer you.
  • Lenders may also use your CIBIL credit report to determine your credit limit, which they may evaluate on a regular basis. If there will be any evidence that you are having financial troubles, the lender may consider lowering your credit limit.

Why should you Check your CIBIL Credit Report Regularly?

You will have a CIBIL credit report if you have ever taken out a credit card or a loan. Before applying for credit, you should check your CIBIL credit report on a regular basis, at least once a year. Not only will you be able to detect any errors that could jeopardise your ability to get the best deals on interest rates and assigned credit limits, but you will also be able to detect any fake credit applications filed in your name. Even a minor blunder could have far-reaching repercussions, preventing you from getting the best loan rates or a higher credit limit on your card. Mistakes can range from simple address issues to inaccurate information provided by your bank or lender, which could prevent another lender from extending credit to you.

What is a Good Score in CIBIL Credit Report?

A CIBIL credit score of 700 to 900 is considered ideal when you are applying for loans or credit cards. Your loan application will have a better chance of being accepted if you have a good CIBIL credit score. If you want to get a personal loan, a home loan, a car loan, or a credit card, a score of over 750 is considered good by most of the lenders and banks.