A bank or financial institution generally takes a few days to consider your business loan application before accepting or rejecting it. Do you know what an important factor is that can make a difference between accepting and rejecting the loan application? Yes, you’ve guessed it right. This factor is none other than the CIBIL score.
CIBIL score is basically a summary of your credit history and reflects your creditworthiness. These 3-digits can make or break the situation. Hence, it plays a significant role in your loan application. This score ranges between 300 and 900. The higher is the score, the more are the chances to get your business loan approved with ease. The lesser is the score, the higher are the chances to get your loan application rejected.
Now, before throwing light on 7 interesting facts about the CIBIL score that no one is going to tell you, let’s first discuss who actually records your creditworthiness and produces this score.
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What is CIBIL?
CIBIL, also known as Credit Information Bureau Limited, was founded in the year 2000 and is India’s first CIC. This bureau gathers and records your credit information, performance, and repayment on all loans and credit cards. This entire information will be then processed and shared with lenders and financial institutions that request the same to check out the loan amount an applicant is eligible for. As per RBI rules and regulations, all financial institutions must be a member of CIC to sanction any kind of loan.
Look, once you’ve entered the world of ‘debt,’ you will be closely watched by the experts. Believe it or not, each and every financial activity of yours will be recorded under CIBIL records, and this information will be accessed when you apply for your next unsecured business loan. CIBIL score is like your report card, and if you perform well, you will get a good score. If you are anywhere close to 900 then you are a good debtor and investors will never mind to offer you loans. If you have a good CIBIL score and looking for a business loan, then opt for a business loan from ZipLoan and get your loan disbursed in just 3 days. They offer a loan between the range of Rs. 1 lakh and Rs. 5 lakhs with the loan tenure of 12 months, 18 months, and 24 months.
Now, there are lots of myths regarding the CIBIL score, and some of them are pathetically wrong. Without further ado, let’s get to know about 7 interesting facts about CIBIL Score that might impress you and drop your jaw in amazement.
7 Interesting Facts about CIBIL Score
CIBIL Score has nothing to do with your Savings Account
One thing you must know about the CIBIL score is that it has nothing to do with your savings or investment account. Though experts are stalking you when you take any kind of loan from lenders or non-banking financial institutions (NBFCs), but still they never stalk your savings account. CIBIL score only tells about debt activities you perform and credit history and no relation with your investment account. However, the score includes fixed deposit accounts, current accounts, and trading accounts.
No information about the usage of your Credit Scores
Another major fact that you should be aware of is that CIBIL will never let you know why your credit scores are prepared and how these scores are used by lenders and other financial institutions. You may know the reason for CIBIL score calculation, but you never know about the exact process of the same.
Checking CIBIL Scores will ever Degrade its Value
One of the myths in people’s minds regarding the CIBIL score is that the more you check the score, the greater are the chances of degrading its value. However, this myth is completely incorrect and has nothing to do with reality. Even leading financial institutions advise you to check your credit score once every month to get updated with its current status. If you know the status of your credit score, then you can easily apply for an NBFC business loan without thinking twice.
CIBIL never Publish your data in Public Forums
If you were a defaulter in the past, then this will reflect in your score. However, CIBIL will not publish your data in any of the public forums or on any platform. They will not display your data publicly, but they will share the same to the financial institutions who are enquiring about a particular individual.
CIBIL only keeps checking on Negative Scorers
Yet another myth related to the CIBIL score is that people think that CIBIL only keeps an eye on the defaulters or negative scorers, but this is absolutely incorrect. CIBIL maintains a record of each and every debtor irrespective of the positive or negative image. No VIP treatments will be given to the positive scorer, and no defaulter behaviour will be done with the negative scorer. Their work is to keep the record and send the same to the lenders and NBFCs.
Your Credit Account Status will affect your Score
If you close your active or inactive credit account, then this information will be displayed in your CIBIL report. Now, this may lead to the hike or may back-fire your score. Degradation of the CIBIL score can cause problems while applying for loans for business without security. But remember, CIBIL will never publish the particular reason for closing an account.
It shows only 3 years monthly Repayment History
One must know that the CIBIL score will show only 3 years of monthly repayment history, and before that, no credit history will be available. Neither you nor the financial institutions can access previous information in any way.
If you have a good CIBIL score for a business loan, then visit the website of the ZipLoan right away with business or house address proof, PAN card, bank statement of previous nine months, and previous 2-3 years’ ITR proof to get your MSME loan sanctioned in no time.
