In the modern financial system, the term CIBIL score has now become common. CIBIL score is like a mirror of financial stability for every individual or business. Banks or financial institutions use CIBIL score for loan approval.
The importance of CIBIL score increases especially when taking a business loan. A loan is required to set up or expand a business, and for this, your CIBIL score needs to be good.
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What is CIBIL score?
CIBIL score is a three-digit number phone number library generated by CIBIL (Credit Information Bureau India Limited) in India. This number is based on the financial transactions of an individual or business and indicates their debt repayment habits.
CIBIL score range
CIBIL score is mainly in the range of 300 to 900:
- 300-549: Very low score, difficult to get a loan
- 550-699: Average score, difficult terms for loans
- 700-749: Good score, easy path to loan approval
- 750-900: Excellent score, best position for borrowing
How is a CIBIL score generated?
The following factors are making a profit from quail farming considered to generate a CIBIL score:
- Payment History (35%): Record of timely loan repayments
- Credit Utilization (30%): Percentage of available credit used
- Credit Age (15%): Old and New Loan Account
- Credit type (10%): proportion of secured and unsecured loans
- Credit Inquiries (10%): Number of applications made for loans or credit cards
Importance of CIBIL Score for Business Loans
1. Chances of loan approval
Banks or financial institutions give primary importance to CIBIL score while approving business loans. Businesses with good CIBIL scores find mobile list it easier to get loans approved.
2. Interest rate on loan
If the CIBIL score is high, the business gets loans at lower interest rates, which reduces the financial burden on repayment.
- E.g .: Businesses with a CIBIL score of 750+ can get loans at an interest rate of 8%-10%, while those with a score of 600 can get 12%-15% interest.
3. Loan Amount
A higher CIBIL score increases the chances of getting a larger loan.
4. Increases reliability
A good CIBIL score sends a positive message to banks . Importance of CIBIL and investors about the financial discipline of your business. This makes your business more credible than other competitors.
5. Getting a cooperative loan becomes easier
Many times, cooperative loans are require to set up a business. Cooperatives are willing to provide loans if the CIBIL score is good.