What is CIBIL and how do you interpret your credit score?

What is CIBIL and how do you interpret your credit score?

A CIBIL credit score is a three digit number that acts like a summary for your credit history and credit rating. This ranges from 300 to 900 with 900 being the best credit score you can get. The closer you are to 900, the better are your chances of getting approved for a loan.

If you don't have a credit history, you will have a credit score of -1. If you have a credit history of less than six months, your credit score will be 0. Credit scores take time to build up and usually it takes between 18 and 36 months of credit usage before you get a decent credit score.

Factors that will reduce/affect my credit score:

1. Late/missing payments

Every time you miss a payment on a loan or are late in paying it by more than 90days, an entry is added to your credit report and stays there for seven years. This proves that you are not able to handle existing debt obligations.

2. Increased spending on credit cards

An increase in spending on credit cards indicates that you are not able to meet cash obligations and puts pressure on you for repayments in the future. While some amount of spending on credit cards is good, too much could be bad. 

3. Large amounts of unsecured loans

Credit cards and personal loans are unsecured loans. While they are the easiest to obtain, they are also the ones that have the highest rates of interests. The larger the amount of unsecured loans, the larger is the payment you have to make.

4. Credit Hungry behaviour

If you have made a lot of applications for loans, lenders will look at you with caution. This behaviour shows that you are suddenly taking on too much debt and may not be able to repay them on time.

Disclaimer - All information in this article is sourced from various websites. This article is compiled by team at Moneyfinder and any content is not owned by us. This information is true as on 28th December 2012