Popularly called the CIBIL score, it is a score of credit worthiness between the range of 300 and 900 generated by Credit Information Bureau (India) Limited. While 300 is the lowest, 900 is the highest CIBIL score. And while there is no hard & fast rule put out by the banks, the general rule is that a CIBIL score of 750 & above makes it much easier for you to get a loan.

Of course, other factors like your debt levels and income levels will also matter. Persons with a CIBIL score of lower than 750 can also get loans, although the rates may be little higher. The only question is whether the CIBIL score for loan is also mandatory in case of loan against property. While some banks may not insist on CIBIL score for loan against property, since it is a secured loan, people with a higher score stand a better chance of getting the loan approved at a lower cost of funding. That is why the quality of CIBIL score matters a lot.

Recap – CIBIL Is A Barometer Of Creditworthiness

Let us quickly recap, what the CIBIL score is all about, CIBIL is short for Credit Information Bureau (India) Ltd, which is a repository of all your credit related data. The CIBIL has data on whether your cheques have bounced, whether your online mandates were dishonoured, whether you defaulted on EMIs, the extent of your debt, whether you settled any debt in the past etc.

The CIBIL score ranges from 300 and 900, reflecting your borrowing behaviour and is a measure of your ability to repay the loan and the willingness to repay the loan. Even if you opt for loan against property, there is a minimum CIBIL score for loan that the bank or the NBFC will insist on. You must ensure that you, at least, have that bare minimum CIBIL score to be eligible.

Here’s How a Good CIBIL Score Adds Value To You

CIBIL score is based on a variety of parameters. CIBIL score is mapped to our PAN number, so any financial lender can easily check your CIBIL score at the click of a button. The CIBIL score not only gives a number but there is also an explanatory sheet which shows how many EMIs were delayed, number of cheque bounces, how much credit limit is utilized, cards overlimit etc. Banks and NBFCs are required to immediately report such delays or defaults to CIBIL, and they in turn consolidate all these to create your CIBIL score for loan.

1. A good CIBIL score can ensure higher funding as compared to a lower CIBIL score. For instance, if you are taking a home loan or loan against property and if your CIBIL score is around 700, then the bank may insist that you bring a higher margin, say 30% margin, instead of the standard 20% margin if your score is 750 or more.
2. The other advantage of a good CIBIL score is that you can bargain with the bank for better terms like a lower interest rate, bullet repayment, lower equity margin from your side etc. However, these benefits would only be available subject to you maintaining a good CIBIL score all through.
3. Thirdly, a good CIBIL score means that the bank would also be more than willing to offer other products like top-up loan, renewal of loan, revolving facility etc.

Factors Impacting Your CIBIL Score

There are a plethora of factors that impact your CIBIL score at a granular level. This list is purely illustrative.

• Your debt repayment is a key variable. Cleaner your credit repayment history, the better. Remember, zero credit history is also too good for your CIBIL score.
• If you have a credit card or a revolving facility, you must ideally use only about 30% to 40% of the limit. The more you pay off, the better it is for your credit score.
• Banks also look at the quality of your credit basket. Too much of high cost unsecured loans like credit cards and personal loans is not a good sign.

Remember, credit score is not the only criterion for loan against property, since it is back-to-back funding. However, a good CIBIL score for loan will ensure quick sanction and disbursal at a competitive rate of interest and also ensure that you get a higher percentage of the property value (LTV) as your loan.