CIBIL score plays a critical role in obtaining loans and credit cards in India. A CIBIL score is a three-digit number that ranges between 300 and 900, and it reflects an individual's creditworthiness. The score is calculated based on various factors such as credit history, credit utilization, payment history, length of credit history, credit mix, and recent credit behavior.
Financial institutions, including banks and non-banking financial companies (NBFCs), use an individual's CIBIL score to determine their creditworthiness and credit risk. A higher score indicates that the individual is a low-risk borrower, and therefore, the chances of the loan or credit card application getting approved are higher. On the other hand, a lower score indicates that the individual is a high-risk borrower, and the chances of the loan or credit card application getting rejected are higher.
A high CIBIL score also plays an important role in determining the interest rate on loans and credit cards. Individuals with a high CIBIL score are likely to get a lower interest rate, while those with a low score are likely to get a higher interest rate.
In summary, maintaining a good CIBIL score is important for obtaining loans and credit cards. A high score can increase the chances of the loan or credit card application getting approved, and also result in better terms and conditions. On the other hand, a low score can reduce the chances of the loan or credit card application getting approved and result in less favorable terms and conditions.
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