Cibil rating and your loan EMI

cibil ratingInterest rate on a loan is one of the most important factors considered by an applicant before going ahead with loan proposals. Every borrower wants to get a loan on lower rate of interest that will reduce his EMI that he has to pay every month. Cibil score plays very crucial role in deciding rate of interest on your loan. A good cibil score will reduce your interest charged and will reduce interest component of your EMI.

Although, banks provide a loan within a certain range of interest but it will differ for different customers depending upon your cibil score. Your cibil score will give you a bargaining power in front of a bank. Banks would differentiate among borrowers with good cibil score with those having a bad one and will offer a better rate of interest to a borrower with above average score. A cibil score above 75o would always be considered positively by a bank for lending purpose.cibil score

Conversely, if your cibil score is below 650 then, you are at the mercy of the bank. Banks would always consider applicant with poor score as a risky phenomenon and will try to compensate their risk by offering a higher rate of interest on your loan. It has been observed that with 10 points improvement in cibil rating, your rate of interest can decrease by 20 bps overall.

Given the high impact of your credit information on your overall interest rates and consequently on the EMI, you should always strive to maintain a above average cibil rating. Best methods to improve your cibil rating is to not to be over dependent on debt to fulfill your needs. You should approach lenders only for genuine business and personal needs. If you are already having a debt on your account then, you should strive to pay your EMIs and credit card dues on time.