- HOW IT WORKS?
- Credit Score & Report
- Credit Bureaus
It is not easy to avail a loan nowadays. For most of the people, it is a tedious task. CIBIL refers to the CIBIL Score of an individual who has applied for a loan. Your loan application will either get rejected if you do not have a credit history or you will get a loan at a higher rate of interest.
Why CIBIL affects your loan application?
The interest rates on loans and the loan tenure is decided to depend on many factors that are related to your income and stability. A loan application is approved only after complete verification and analysis about the creditworthiness of an individual. This verification and analysis are done by different credit bureaus like Experian, CIBIL and Equifax.
CIBIL is a complete database of borrower information that lenders share amongst them so that they can protect themselves from potentially lending to defaulters.
Ratings offered by CIBIL indicate the creditworthiness of an individual which is based on an individual’s performance with credit in the past. CIBIL and other bureaus are basically there to protect the lenders.
How Does CIBIL Affect your loan application?
Since it is clear that CIBIL scores analyze the creditworthiness as well as the ability of an individual to repay your loan. For an individual to be eligible for a loan, the credit score must be at least 750. If an individual’s credit score is closer to 900, the easier it is for the loan to get approved and that too at a better rate of interest and on better terms.
If an individual’s CIBIL score is 0, it implies that information regarding the borrower’s credit history is available only up to a period of fewer than 6 months in total. This is also known as “NA” or “not applicable”.
If an individual’s CIBIL score is -1, it implies that there is no information about the borrower’s credit history. There is no information to report, hence this score is also known as “NH” or “no history”.
Creditseva’s tools and apps will help you in getting to know your credit score and also improve your credit score so that your loan application does not get rejected. You will give complete guidance and support in understanding, analyzing and monitoring your CIBIL Score and Report.
Process of Loan Approval
If an individual aspires their loan to be approved, the following steps are to be followed by them.
1. You need to fill up the loan application form and submit it to the lender.
2. Your CIBIL Score and Report will be checked by the lending authority.
3. Your loan will get rejected if you have a low credit score.
4. If you are not eligible for the loan, your application will get rejected.
5. If you have a high Credit Score, your eligibility criteria will be checked along with the documents that have been submitted by you.
Details Checked in Your Credit Report by Lenders
Following are the details related to your Credit Report that is checked by the lender
1. The lenders look at the Company profile. Generally, the banks have a list of individuals who will be granted the loans.
2. The EMI to income ratio is another thing that the lenders check before approving a loan. If your EMI has exceeded 50% of your monthly salary, then there a lesser chance for you to get a loan.
3. In case of a loan that is written off, it is reported in the Credit Information Report in the Account Status section of your credit report.
4. Your payment records regarding your credit cards and loans need to be submitted to CIBIL by the lending authority. This is done on a monthly basis.
5. The record of your payments is the basis of your CIBIL Score and Report that is provided to lenders so that the loan applications can be evaluated and approved.
6. If you monitor your CIBIL Score, it will be helpful for you to have a control on your credit information. This will in turn help to ensure that your Credit Score is maintained above 750.
After the submission of the application for your loan, the bank will begin its duty of verifying the documents that have been submitted by you. After this step, there will be a checking of your CIBIL score. If an individual’s CIBIL score is above 750, it will be considered a good point and that individual will be eligible for a loan. If an individual’s credit score is below 750, there are chances of the loan application getting rejected.
Sometimes the loan applications for those individuals, who have a credit score of -1 or 0. This is because this score considers only the last 6 months of your borrowing history and does not provide an accurate picture of the individual’s capability to repay the loan.
If the credit score of an individual isn’t too low or is in the 0/-1 range, the individual can negotiate with the bank to approve the loan. The loan might not be approved on the best terms, but if the EMIs can be paid and you get a feeling that you can clear the loan off without any problem, you should go for it. If you clear this loan off, it will help you in increasing your credit score. This will make it easier for you to get credit in the future.
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