How does CIBIL score impact your financial status

Cibil score reflecting cibil credit report is a three digit number is indicator of one’s credit status, ie. how does one perform on credits & loans. It makes a huge difference on one’s financial worth. Simply put, a higher credit score appeals to lenders and good business prospects while a low or poor score will turn away investors and lenders. The owner of the credit score / report has to be very careful, alert and knowledgeable about what is credit, what is a good / bad score, how will it impact loan requests, will it make me loan eligible, etc. One should also be aware of the impact a CIBIL score or a credit score of any Bureau has on their financial reputation.

CIBIL and all other Credit Information Bureaus in India give a credit score rating from 300 to 900, with 300 being the lowest and 900 being the highest. Any score ranging from 300 – 599 is considered to be poor. A lender extending credit on such scores are dismal and your loan application may get straight away rejected. It is also possible, that potential employers would reject your candidature as well, because credit score is reflective of a person’s ability to manage his affairs. Poor financial management gets construed as inefficient skills to manage the most important aspect of life i.e. finance. A poor score translates to bad financial health which in turn indicates, the person is under financial crisis.

A score between 600 – 749 is an average credit score. An individual falling in this score range may still be able to access credit from certain lenders with higher risk appetite, but may find it difficult to get approval on an unsecured loan. Also, the loan getting approved may come at a higher cost, means that a higher rate of interest may get charged on loan.

Credit scores between 750 – 900 are considered to be good scores. A good score will be helpful in not just receiving loans from institutions, but will also facilitate getting charged the best interest rates and thus saving a sizable amount of money. Prospective employers will also view your candidature positively with a score above 750. In short, a ‘good’, to ‘very good’ credit score will definitely put one’s financial standing in good position.

The learning being that CIBIL score have a great impact on one’s financial status.

– Poor CIBIL score can lead to non-availability of loans that can result in financial losses
– Getting charged a higher rate of interest can lead to a higher EMI and or longer term for loan. Again leading to financial loss
– Poor score can also lead to getting rejection by potential employer which has a direct impact on finances of any individual

Therefore it is very important for one to constantly keep a track on his scores so that corrective measures could be taken to improve your credit score if the scores decrease.

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