As the saying goes” Money maketh a Man” it is by viewing the CIBIL history of an applicant that puts forth the complete financial history.
The CIBIL score is the rating or scoring given to an individual on the basis of her/his credit dealings;
Whilst a reasonable credit score shows the ability to manage Credit efficiently a below average rating denotes that finances have been tight & not too easy to manage.
A CIBIL is not only viewed as a guideline for issuing further Credit, but also to understand the financial stability & management skills of an individual. Prestigious Organisations also asses the CIBIL of an applicant, before confirming an employment; as the CIBIL record not only portrays financial details but goes a long way to ascertain other aspects of person’s character traits .
A Credit card is regarded as a status symbol Healthy credit card usage denotes a zest for life.
Usage of Credit cards denotes the lifestyle choices as Credit cards can be used for travelling, shopping, eating in restaurants & your fuel bill. A Credit card is not a serious tool for cash credit so withdrawing cash from a Credit card, & not returning it promptly may denote a cash crunch or an emergency. Payment of the monthly Credit card bill as per the due date is important to maintain a good repayment record & proves a disciplined repayment record, whereas regular late payments may define an unorganised behaviour.
Further a Credit Card & a Personal loan being an unsecured credit tools will boost the CIBIL score soonest on regular usage & repayment, implying that an individual is able to manage credit terms properly.
A personal loan is also an unsecure loan which can be used for Personal needs, taking a personal loan when the need arises or for an emergency is a good option. Maintaining a timely re payment record for the entire tenure without any delays or default implies a conscientious behaviour towards credit.
Consumer Loans reflecting in the CIBIL shows a standard of living is being maintained though a surfeit of them will indicate thoughtless spending.
A yen for a better life will drive an individual to acquire a self owned residence rather than live in a rented premise. Obtaining secure loans such as a Home loan or a vehicle loan indicate a financial stability & planning. Running of more than one property loan indicate aspirations for building assets for the future.
Keeping a track of all the credit lines being used & making sure that there is always enough balance in your salary account on the date when the EMI for the Loan taken is to be deducted is the trait of well organised & alert individual.
Applying for too many loans or credit cards will reflect in the CIBIL, which can mean a credit hungry behaviour or irresponsibility towards credit.
Having surplus of loans or overspending on credit cards means an individual is ‘overleveraged’ & will have a tough time juggling finances & keeping the payment track in order while managing monthly living expenses; as opposed to an individual who does not use any credit may be considered un ambitious or not having the ability to take credit & manage it properly.
It does not however mean that any persona may not go through a time of financial crises which could be due to loss of a stable job, illness in the family, an emergency or just a time of splurging during wedding or other celebrations could cause a strain on finances. At this time of crisis there might be delays or defaults but this is problem which could be faced by any individual; the challenge being to restructure your finance, consolidate your loans & pay back all credit card bills to avoid extra interest being paid. Getting back on track & rebuilding your credit score will prove your ability to successfully get over a crisis.
A salaried or a self employed person, earning a regular income & using secure & unsecure credit facilities with a good repayment record will have a healthy Credit score which in turn is the sign of stability, success with using credit successfully, living within your means & good management of finances!