Article

Bad Credit
November 27 , 2012

A person is said to have bad credit if she has defaulted on her credit obligations in the past. People with bad credit find it difficult to get approved for new loans. While banks have stringent procedures of lending to minimize their risk of lending to those who might not repay on time or worse not repay at all, the icing comes from CIBIL(Credit Information Bureau (India) Limited). Cibil has introduced Cibil TransUnion Score which throws light on the credit history of the individual. This score ranges from 300 to 900.

Credit history of every individual who has borrowed through a formal channel like bank or financial institution is monitored by Cibil. The information is provided to it by lenders on your loans and credit cards. If you have not paid EMIs on time, have got your pledged asset confiscated, or are running high credit card balances your credit score deteriorates. We don't have a threshold limit yet for bad credit but banks prefer to lend to them whose Cibil TransUnion Score is 700 or more.

If individuals with bad credit manage to get loans approved, they must often pay a higher rate of interest than others with better credit. In developed countries credit score is used for more than just approving credit. Insurance companies use it determine premiums and other utility providers might charge higher security deposit. In India as financial data of individuals gets linked to Aadhar number, the scope of credit score would widen. Before all that happens you have ample time to correct your bad credit, if at all.

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