It happens quite often that you apply for a personal loan of let us say Rs.5 lakhs, and you are visibly surprised when the application gets rejected. This is despite the fact that you are earning well and have all the characteristics and qualities of an eligible borrower. You may be in the high-income bracket, you may have built a sizable portfolio of stocks and mutual funds and he hardly have any loans. Then when you contact the bank, you are surprisingly informed that there were negative marks in you CIBIL score as one of your cousin brothers had settled a loan with his bank about 4 years back and you had stood guarantee for that loan at that point of time.

To understand CIBIL score, you first need to understand what CIBIL is all about and what it really stands for. The Credit Information Bureau (India) Ltd (CIBIL) is the largest credit scoring agencies in India. When you open a bank account, invest or borrow you submit your PAN number. Through the PAN number, your credit history is tracked and stored with CIBIL. There are other such Credit Information Services companies in India Equifax, Experian etc. However, CIBIL is the oldest Credit Information agency in India and most banks download the credit data to CIBIL. As a result CIBIL score has become a kind of benchmark for the banking and finance industry. Normally, getting a loan is much easier if you have a CIBIL score of 750 plus, although that is not a guarantee that your loan will be approved. CIBIL score can go as high as 900, which is the upper limit and the closer you are to 900, the better your chances of getting a loan. The question is what you can do to improve your CIBIL score and improve your chances of getting your loan application approved.