CIBIL Score: 5 ways in which this number affects your loan eligibility

livemint.com:

CIBIL score is a three-digit numeric summary of an individual's credit history. It ranges from 300 to 900, with higher scores indicating better creditworthiness. 

Banks and other financial institutions use these scores as one of the factors to evaluate borrowers' creditworthiness and determine their eligibility for loans. 

1. Assessing creditworthiness: Lenders use the CIBIL score to assess the creditworthiness of a borrower. A higher score suggests responsible credit behaviour and reduces the perceived risk for the lender.

2. Loan approval: A good CIBIL score raises the likelihood of loan approval. Lenders are more inclined towards approving loans for individuals with higher scores as they are less likely to default on payments.

3. Interest rates: Borrowers with higher CIBIL scores are likely to qualify for loans at lower interest rates. Lenders often offer better terms, including lower interest rates and fees, to borrowers with good scores as they are deemed less risky.

4. Loan amount: A higher CIBIL score may also increase the maximum loan amount which a borrower can qualify for. Lenders may be more willing to extend larger loan amounts to individuals with strong credit history.

5. Negotiating power: Borrowers with good scores have more negotiating power when it comes to loan terms. They can negotiate for better terms such as lower interest rates and other repayment terms on the basis of their creditworthiness.

ALSO READ: What is the significance of understanding and improving your credit score?

So, all in all, keeping a good CIBIL score is vital for improving loan eligibility and obtaining favourable loan terms. It requires responsible credit management, including timely repayment of debts, keeping credit card