A credit score is a three-digit number that rates creditworthiness. The higher the score, the more the chances of getting approval for loans at better rates. The score is based on credit history, which includes information like the number accounts, total levels of debt, repayment history, and other factors. Lenders use credit scores to evaluate credit worthiness of the borrower and checks the probability of repaying loans timely.
The Credit Information Bureau (India) Limited (CIBIL) is the most popular of the four credit information companies licensed by Reserve Bank of India. The three other companies are Experian (US Based), Equifax (US Based) and Highmark. CIBIL Limited maintains credit files on 600 million individuals and 32 million businesses. It is a part of TransUnion, an American multinational group. Hence credit scores are known in India as the CIBIL Transunion score.
CIBIL Score is a 3-digit numeric summary of any credit history, rating and report, and ranges from 300 to 900. The closer the score is to 900, the better is the considered credit rating.
Credit history is a record of a borrower's repayment of debts. Credit report is a record of the borrower's credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. Credit score is the result of a mathematical algorithm applied to credit information to predict worthiness of credit.
A CIBIL credit score takes time to build up which is usually a period between 18 and 36 months or more of credit usage to obtain a satisfactory credit score.
CIBIL score plays a critical role in the process of loan application. On approaching any bank or financial institution for loan the lender first checks the applicant’s CIBIL score and report. If the score is low then it becomes difficult to consider the application further while a high score improves the credit-worthiness. The CIBIL score works as a first impression for the lender. Though the decision to lend depends solely on the bank and CIBIL does not in any manner decide if the loan/credit card should be sanctioned or not.
Typically, a score of 700 is considered good.
It is very common for traders to deal in credit while trading on daily basis. In this process they often incur loses. CIBIL is a platform which is especially for financial institutions.
Traders Saathi, the brainchild of Shri Gopal Roy, is platform designed especially for traders to caution them so that they can trade safely and deal with customers who have due credibility in the market. Customer’s track records and other parameters are taken into consideration to calculate their scores and define credibility. It is a wonderful support system though the decision to give credit or not lies totally on the trader as for CIBIL score the decision lies with financial institution.
