Need for the CIBIL Score
A personal loan is an unsecured loan taken to meet current financial needs such as financing a wedding, vacation, medical emergencies etc. Personal loans are backed only by promise to pay and are therefore also called signature loans or unsecured loans. Unsecured loans are advanced on the basis of the borrower’s credit history and ability to repay the loan from personal income.
The Credit Information Bureau of India Ltd (CIBIL), India’s first credit information company devised a score which represents an individual’s ability to repay a loan.The institute keeps a record of the credit history of individuals, making it available to banks and other financial institutions that can further make an informed decision about the sanctioning of a loan to an individual.
A good CIBIL score is a prerequisite for obtaining a personal loan. A good CIBIL score for a personal loan is any score above 750. CIBIL score reflects the creditworthiness of the applicants. A strong CIBIL score helps the borrower negotiate interest rate and terms.
The CIBIL score is directly related to an individual’s ability to assure the creditor a pay back of the loans in a scheduled and timely manner. Payments of EMIs on-time, not exceeding the credit limits and regular payments of credit card balance are some essential factors which can increase one’s CIBIL score over a short span of time. Since CIBIL score is a representation of an individual’s repaying capacity, all records and transactions that affect the same are taken into account while sanctioning a personal loan.
CIBIL Score, the Ultimate Factor?
While the CIBIL score is of assistance to the banking institutions in assessing the repaying capacity of an individual, those with rocky financial past records are often at a disadvantage. It hampers such individuals from applying for loans since their low CIBIL scores have a negative impact on the banking institutions. Realising this problem of the masses applying for personal loan sanctions, IndusInd Bank has initiated simple yet effective personal loan processes. It has done away with the complexities of collaterals and guarantors as a pre requisite for a loan sanction. Despite a low CIBIL score, the bank allows individuals to obtain loan with simple documentation and quick processing with zero technical hassle.
IndusInd Bank recognises an individual’s personal needs and aspirations and aims to act as a facilitator in fulfilling their dreams. With a system of convenient doorstep service and low interest rates, it helps individuals to use this as an opportunity to not only get the required loans but also to improve their existing CIBIL scores for future transactions.
Improving the CIBIL Score
Thus, while maintaining a high CIBIL score is essential for obtaining a personal loan it is equally important for borrowers to realise that a CIBIL score is not a permanent score to assess an individual’s repaying capacity. Even if the borrower’s score is low, it can be improved by ensuring that all EMI’S are paid timely, late payments and defaults are eliminated, credit card limits are not exceeded. All these factors reflect the servicing capacity of the borrower. There may be people who do not have a CIBIL score. Factors such as funding an asset by taking a secured loan, leveraging tie up of your company with the bank to increase your chances of getting a credit card ensure a good CIBIL score.
The wall of the CIBIL score is scalable. IndusInd Bank is effectively scaling this wall to ensure that a large group on individuals with a need for personal loans are not ignored primarily on the basis of a rigid assessing mechanism.
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