In order to ensure that you have right to adequate loan at best rates, make sure that you have good credit rating. You past record of payment will effect on your future application.

Most of time you have a yearning to buy  electronic gadgets such as LCD/LED TV, renovate your house or want to go to dream vacation. Fortunately in this situation you have the option to apply for the loan from any financial institution. Nevertheless, due to rising competition and default rate, many banks have started scrutinizing loan application forms. Besides, looking at you repaying capability of the loan based on the customer’s salary the lender also considers your past loan account.

Credit Rating:

Nowadays, bank considers your credit value, which is determined by credit rating agencies who prepare credit statement of the customers. This credit agency collects all the information about the customer and analyzes the information based on various criteria. Then to make it simple they assign the score to the borrower. “How does Credit Rating affect the loan”? Well, a poor credit score will indicate that the borrower is not paying the loan on time which is applied by him. So the lender would reject the application form of borrower whose credit rating is poor.

CIBIL

In India, the credit information Bureau India Limited (CIBIL) undertakes the rating of companies and their employees or individuals. Banks and private lender provide information related to loan and credit card to CIBIL on a monthly basis. Base on the information provided CIBIL creates Credit report and score and make these available to the lenders.  This will help the lender to differentiate borrower and decide whether to approve the loan application within a short interval of time. The range of credit score should be from 600 to 1000. What is good credit score? Good credit score must be greater than 700 is considered to be a good score.

Importance of Credit Rating:

Both individuals and companies are always in need of finance. Through credit rating information, banks are easily recognizing genuine customers and provide them the loan at a short period of time.

In addition, customers with good history of credit rating can enjoy large loan amount at the lowest interest rates.