How Important Are Your Credit Scores?

Still wondering why that home loan you applied got rejected recently? Then you must be of that ignorant lot who still has no clue about credit scores in India or more commonly known as CIBIL scores. Does that ring a bell in your ears? Well, yes credit scores are no more a concept of the UK or the US. It is a concept which has spread its wings in India since 2000 with the inception of the Credit Bureau of India Limited (CIBIL). 
In the 21st century, your credit scores can make or break your financial standing among the loan and credit scenario. Hence, sooner you gain knowledge on this aspect the better for your financial future.
 
Our lives are more and more getting dependant on home loans, car loans, personal loans or even credit cards. You tend to get lured with the various credit choices offered by the different financial institutions, but you are left clueless when you apply and get rejected outright!  We are left wondering, why the heck was it offered at the first place when you had to be declined? It is indeed an embarrassing experience for many as we do not understand the concept behind. The lenders have become stringent about the credit rules in the current scenario and let’s see why.
 
What is CIBIL?
 
Did you miss your credit card payment last month? Well to your surprise, that got reported to big daddy that is the Credit Bureau of India Limited. And to add to your woes, it will only reduce your credit scores which constitute 35% of your report!
 
This collated information (CIR- Credit Information Report), is further supplied to the lenders which helps them to analyze the loan or credit eligibility of the borrower. The amount sanctioned or whether he/she is eligible at all is based on their credit history.
 
Credit Score Vs Credit Report
 
What confuses many of is the distinction between credit score and credit report.
 
A credit score is a range of three digit numbers anywhere between 300 and 900. The higher the rating more is your chances of getting approved for loan or credit. Credit scores are the initial parameter that a lender focuses on and the most preferred figure is a score above 700.
 
Therefore, a bad performance in any of the above categories can affect your credit score thereby affecting your loan eligibility. And, it’s not only about a loan or a credit card; your credit history also affects your insurance premiums or even your new job. The scores are now being evaluated by the insurance providers and even the employers in certain organizations.
Credit Sudhaar is India’s first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy
Courtesy: Indian Republic
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