The CIBIL score is very important when it comes to applying for a loan and this is one of the first things that the financer would check when he approves the loan. A score above 700 is considered quite good and one should wait and bring up the score if it happens to be below 600. The TransUnion CIBIL was started by the Credit Information Bureau of India Limited in 2000 and its main task is to allot a score to an individual or an organization based on their financial history and how they tend to manage their finances
If one already has plans to apply for a loan in future- be it a home loan, a car loan or a business loan, one should start building on the score from an earlier time. To do that one should remove financial liabilities as much as possible and make all the payments on time, like bill payments, credit card payments, any existing EMIs or premiums and the like. A good score is an automatic reflection that the person is careful with the finances and that the lender can loan the money out to him without a doubt about eh repayment. It is not that applicants with low CIBIL score are not approved for a loan, but then they might have to pay very high rates of interest or they might have to provide some kind of a collateral as well.
Loans are approved quickly and the interest rates are lower for those who have a good score. One also has higher approval limit for the loan and one can negotiate with the creditor to bring down the interest rate as much as possible. Even with credit card, they stand a chance to enjoy a lot of good offers and NBFCs like Bajaj Finserv also have a number of pre- approved offers in place for those who have good credit scores.
SMEs and MSMEs can get business loans from NBFCs like Bajaj Finserv by submitting only two documents. Instant financing is available up to Rs. 30 lakh at low rates of interest.
Also Read: Why should you check your cibil score before applying for business loan
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.