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Nowadays we come across words like 'CIBIL', 'Credit History' etc., in the context of loans/Credit Cards. Citibank and CIBIL together bring you a customer knowledge series to explain these terms.
- CIBIL is India's first credit information company that maintains a centralized information repository on consumers and businesses regarding their credit history, as shared by its member banks and financial institutions.
- CIBIL's member institutions regularly send updated credit details of their customers to CIBIL.
- This contains, but is not limited to, Credit Card spending and payments, loan amounts and payments, mortgage loan amount and payments and other credit borrowings from all member institutions. Member banks submit this information in a regular manner.
- CIBIL uses these details to create a Credit Information Report for each customer.
- CIBIL also gives a Credit Score, based on the credit information report.
- When you apply for credit - say, a new loan or a Credit Card, the member institutions request CIBIL for details of your Credit Information Report.
- Based on your credit information report & credit score from CIBIL they decide on whether to offer the product, the amount of loan & interest rate to offer to you.
- The credit history & repayment behaviour of a customer is translated into a number developed by CIBIL, called 'Credit Score'.
- It is an indicator of the credit-worthiness of a customer. It predicts the likelihood of a consumer defaulting on a payment. A borrower who is more financially disciplined will have a higher Credit Score. Higher Credit Scores are better.
- A strong credit history & a higher score will get you better credit terms - better loan amounts & attractive rates of interest.
- If you have defaulted on any payment, then your credit history will be impacted and it may limit your ability to get a new credit product, or sustain the current product.
- If the bank is rejecting a loan on the grounds of the CIBIL report being unfavourable, then you can ask your bank for a copy of your CIBIL report.
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