Whenever it comes to taking a loan, the first thing that is mentioned is the credit score. Banks decide whether to give you a loan or not by looking at your credit score. Also, it affects the interest rate of the loan. That is, if your credit score is good, then you get the loan easily and with better interest rates.

But if the score is not very good, then it is difficult to get a loan and if you get it, then more interest is charged on it. But has this question ever come to your mind on what basis the credit score is prepared and who prepares it? Know about it here-

Know who prepares your credit report-

Many credit bureaus issue your credit report. Among these, credit information companies like TransUnion CIBIL, Equifax, Experian, and CRIF Highmark are considered to be the main ones, these companies have the license to collect financial records of people, maintain them, and generate credit report/credit scores based on this data. These credit bureaus evaluate the customer data deposited with banks and other financial institutions such as outstanding loan amounts, repayment records, applications for new loan/credit cards, and other credit-related information, etc., and prepare the CIBIL score based on that.

These factors are especially seen while preparing the CIBIL score-

1. Your credit history starts getting created from the first time you take a loan or a credit card. While preparing the CIBIL score, your credit history is first looked at. Through this, it is known how old your credit history is and how is your repayment record. This credit history also affects your CIBIL score.

2. While preparing the CIBIL score, your CUR i.e. credit utilization ratio is also seen. CUR means how much percentage of the credit limit you have you use. If you are a credit card user, use only up to 30% of your card limit. Avoid making very big purchases with a credit card. A high credit utilization ratio shows that you are very dependent on credit cards. This affects your CIBIL score.

3. How many unsecured loans and how many secured loans you have taken earlier, this reveals your credit mix. Your credit mix should be balanced. If you have taken unsecured loans like personal loans, credit cards, etc. many times in the past, then it shows that you have a shortage of funds and your dependence on credit is very high. On the other hand, if you have been taking both secured and unsecured loans when needed, and have paid all of them on time, then it shows that you are capable of managing all types of loans. In such a situation, your credit mix remains balanced.

4. While preparing the CIBIL score, some other things are also taken into consideration like if you have ever done a loan settlement in the past if you are a guarantor for someone's loan and it is not being repaid, then these things spoil your credit record and it directly affects your CIBIL score.

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