Why You Should Care About Your CIBIL Score?

Why You Should Care About Your CIBIL Score

Money plays an important role in the survival and success of any individual, but the system doesn’t take the pain to educated individuals on the matter of money.

Most of us depend on loans to buy our house or a two wheeler or a car. We all know that we can approach a Bank for loan application. But how many of us know that we also need to take our financial report card to the Bank to get our loan approved? That is why you should care about your CIBIL Score.

How many of us know that a financial report card is also our CIBIL Credit Score?

Do you know what your CIBIL Score means to your Bank?

Or, do you even know what a CIBIL Score is, and why you should care about it?

It’s only when you apply for a loan that you come across this term and the Bank tells you that your CIBIL Score is not up to the mark to qualify for a loan.

What the hell is going on?

Why can’t people be educated on the importance of CIBIL Score and how they can maintain a healthy CIBIL Score?

In this blog I try to simplify the concept of CIBIL Credit Score and why you should learn to maintain a healthy score?

Let’s Begin...

What or Who is CBIL?

TransUnion CIBIL Limited is a company that offers credit information. The full form of CBIL is Credit Information Bureau India Limited. The objective of CIBIL is to collect and maintain credit records of individuals and business enterprises in India.

It has a comprehensive collection of consumer borrowings and repayment history to access the risk before giving a loan to an individual or an enterprise.

Here is how CIBIL Functions

Member Banks and Credit offering Institutions submit records of individuals and enterprises to CIBIL on a monthly basis. Based on the information provided, CIBIL creates Credit Scores of individuals and enterprises. These Credit Scores are then passed on to the Banks and Credit Institutions for them to take right decisions while evaluating and approving a loan application. In short it protects the Banks from burning their fingers by not offering loans to individuals and businesses who have a bad history of repayment. This helps them in safeguarding themselves from incurring bad debt.

So, here is how your CIBIL Score can affect you.

Your CIBIL Score is Your Financial Report Card

When you apply for higher studies, the college looks at your mark sheet, when you apply for a job, the company wants to look at your academic qualification. Both college and organisations want to look at your academic report card to help them decide whether they should take you in or not.

Same is the case with your CIBIL Score. If you approach a Bank or a financial institution for a loan – whether it’s a Personal Loan or Home Loan – the first thing that they will check online is your CIBIL Score. This can be easily done by them using your PAN CARD Number and AADHAR CARD Number. They have a proper system in place. Based on your CIBIL Score they will decide whether to process or outright decline your loan request.

Your CIBIL Score Becomes a Filter for the Banks and Financial Institutions

Just as Colleges and Organisations have a cut off for taking in candidates, CIBIL Score becomes a cut off for the Banks and Financial Institutions to filter out applicants who don’t have the minimum required CIBIL Score.

So, if you’re CIBIL Score is not above or equal to the cut off point required by the Banks they will not even consider your request. You may have proper IT papers and all other relevant documents to qualify for the loan; but if you fail in your CIBIL Score your loan application will be rejected.

Now it’s time for you to get in to action!

It’s time for each individual to pull up their socks, roll their sleeves and take charge of their Credit Score.

Whether you like it or not, your future life might depend on your CIBIL Credit Score.

In Conclusion

There was a time not long ago when foreign Banks and Credit Institutions bombarded Indian market with easy money. Anyone and everyone were getting loans and credit cards. The business was booming for them.

Then came the time for payback; this is when the problem started. People started defaulting and disappearing from the radar of Banks and Credit Institutions. Banks lost money and couldn’t handle the pressure. They sold their outstanding loans to Indian Banks and Institutions and went home.

If only those banks had invested some percentage of their money on educating the masses on handling and repayment of loans there would not have been so many heart aches.

But we cannot undo what happened. All we can do is learn from the mistakes and make sure it doesn’t get repeated in future.

This is why CBIL was incorporated in the year 2000.

There are still people in India who had mismanaged the easy money provided to them and have severely damaged their CBIL Credit Score. It’s now on their shoulders to rectify it and strengthen their Credit Ratings.

For some it may take few years and for others it may cost a large amount of money to pay back.

It’s time to be Futuristic...

The GOI with the help of CIBIL should study the spending habits of the current generation. Today’s generation must be educated on how to maintain a strong credit score in order to have a bright and healthy financial report card.

A Money Educated Society will lead to a financially literate country where every citizen is rich.

If you found value in this blog then you may want to read my blog on How to Improve Your CIBIL Credit Score.

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