When you apply for loan, banks asks your identify proof and three year income tax returns. Employment details your assets etc, which are obviously know to all of us. Apart from knowing how much worthier you are, banks also sees, your reputation of paying your loans. For this in India, we have CIBIL (credit information bureau INDIA Limited)
CIBIL this is private organization which collects all the information of all citizen all over the INDIA. It has complex calculation method, through which it calculates credit score. Banks collects this information by CIR (credit information report) and they decide regarding loan lending.
CIBIL gets information loan repayment from all the banks and credit card. Exactly how the points are given is not known. Because, if citizens come to know about this, they will find mechanism to cheat, this what is said.
How to know your credit score
80% of the bank sanction loan if score is >750
What to do if there is Dispute in score
What can you do to improve your score
These are self-explanatory just for completion
1. Before taking loan, plan the repayment strategy
2. Take only the loan to the extent that is required,
3. Have no more than one credit card.
4. Pay premiums regularly
5. Avoid late payments
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