Every person who has a financial earning and has a bank account would have a credit score to his name. For a credit score, every person should mandatorily have a PAN card. Credit Score is also known as CIBIL score. Usually the range of credit score is between 300-900. The lower range of the credit score is 300 while the highest score is 900. Generally any score which is higher than 800 is considered good. Credit score has huge implications if someone is looking for credit or loan.
Every person can get has CIBIL report using the available government and private websites. This CIBIL Report will provide you the bellow mentioned details:
- Account History: This will have all the details related to your borrowing of the past i.e the type of loan a person has taken, the name of the lender, and the dates of the transaction. It is similar to having an account statement from the bank.
- Credit summary: This is like your life history of the total credit you have taken in the past and will have the previous borrowings as well.
- Public Records: This section is relevant for the official purposes and flaws that are committed with respect to financial accounts. In case you have done and misses or have not paid any EMI or done some frauds. This section would contain all those details.
- Credit Enquiries: here you will get all the information related to the inquiries being made for giving the loan. Lenders will check this page and might contact you for any services/loan requirements.
What it Means?
Credit score is the most important and relevant thing if a person has a loan requirement, so it is important to keep a good credit score. Credit score denotes how reliable a person is and will denote if the person is a risky borrower or he can be trusted.
As a bank if I am approached by an individual for loan, I will first check his CIBIL score and would get a broader idea in the credit worthiness of the person.
Also, a good credit score of greater than 850 will give you the power of negotiation with the lending agencies. You can ask for lower rate of interest as well as you might be able to get your processing fee waived off.
A credit score of greater 800 means that he has paid the past loans and EMIs on time and would mean that the person is responsible and can be relied on. Also another factor which can help you get loans at lower rate is by keeping a tracking of your credit score and apply whenever you see that credit score is good.
Similar to the individual credit scores, even businesses are given credit score and in fact as even more important as the businesses are often in need of loans due to their business requirements. Businesses are many times in need of investment from financial institutions in order to expand their business of pay debts. Therefore a business having a high score would easily get investments at lower rates.