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TransUnion CIBIL Ltd., earlier known as Credit Information Bureau Ltd., is among the leading credit information companies in India. Incorporated in 2000, it is popularly known as CIBIL credit bureau. The bureau gathers and maintains records of your payments related to credit products such as loans and credit cards. Lenders, financial institutions like banks and non-banking finance companies submit your credit records to CIBIL every month. The credit bureau uses this information and computes your CIBIL score and creates a detailed credit report. Lenders use this report and score to measure your creditworthiness and assess whether you can repay the borrowed amount.
This bureau is licensed by the Reserve Bank of India (RBI) and is overseen by the Credit Information Companies (Regulation) Act of 2005. It has more than 2,400 members including banks, financial institutions, non-banking financial companies, and housing finance companies. The credit bureau maintains credit records of more than 550 million consumers and businesses.
A CIBIL score is a 3-digit number that represents your creditworthiness. It ranges from 300-900. The closer your score is to 900, the better the chances are of you getting a loan or a credit card approved. A higher score suggests you have been a responsible borrower and have a good credit history. As per general standards, a score of 750 and above gives you quicker access to loans and credit cards.
There are four main factors that make up the score:
|Credit Type and Duration||25%|
One of the biggest factors that affects your CIBIL score is payment history. You should make it a priority to pay your credit card bills as well as loan EMIs on time. Avoid late payment of bills at any given time as it will bring down your score. As per a recent CIBIL analysis, a 30-day delinquency can reduce your CIBIL score by 100 points (as reported by Financial Express).
The total amount of debt you have at a given point of time has a major effect on your CIBIL score. Credit utilisation ratio is the amount of credit used by you in proportion to your combined credit limit. You should maintain a low credit utilisation ratio at all times to get a high score. As per experts, it is advised to use only up to 30% of your total credit limit.
A long credit history helps to improve your score. It suggests that you have a good experience with handling credit. Lenders prefer offering credit to people who have a rich history because it makes assessing you as a borrower, easier. Therefore, it is advised to avoid closing old cards as you will lose out on the long credit history and good repayment behaviour associated with it.
It is important to have a decent credit mix. Maintaining a healthy balance of secured and unsecured credit helps to boost your CIBIL score. You need to make sure that you don’t have high secured credit or unsecured credit and instead try and maintain a good balance of both.
Avoid making multiple credit inquiries within a short period of time. When you inquire to a bank or a financial institution about a loan or a credit card, the lender will pull out your CIBIL report. Such an inquiry is called a “hard inquiry” and it has a negative impact on your score. Multiple credit inquiries can bring your score down. Therefore, it is advised to inquire for credit only when you actually need it. Meanwhile, when you check your own score or report, it is called a “soft inquiry”. You can check your report multiple times and it will not have any effect on your CIBIL score as soft inquiries are not recorded on your report.
In order to improve your CIBIL score, you need to be consistent in paying bills on time and be a responsible borrower. Here are some of the ways that will help you improve your score.
At the end of the day, any money from a line of credit is borrowed money. You need to repay it to your lender, with or without interest, depending on the type of credit line, and your repayment behaviour. So, use your credit card, loan amount, or any other type of borrowing wisely. Also, do not use or borrow more than you can afford to repay. This could lead you into a debt-trap.
Apart from being charged late payment fees on your late payments, this repayment behaviour will also get reported to the credit bureaus, affecting your score. If you have multiple credit card payments and loan EMIs to make, it is advised to set up payment reminders or due date alerts to get more organised. This way you never forget making your payment. You could also set up a direct debit arrangement with your lender, where your payments get automatically deducted from your savings/current account on the due date. This way, you never have to worry remembering due dates, or about late or missed payments.
vAs mentioned earlier, you should ideally not exceed 30% of your total credit card limit. This is especially important if you apply for a home loan in the future. When you apply for a home loan, banks will assess your debt-to-income (DTI) ratio. This ratio evaluates your total debt with respect to your total income. If your debt exceeds 50% of your income, banks are more likely to reject your application. Another reason why you should maintain a low credit utilisation ratio is to not appear credit hungry. If most of your expenses are being borne by your credit lines, you will appear as a borrower who is unable to manage their expenses on their own.
If you have defaulted on any payments in the past, it will be reflected in your credit history and will bring your CIBIL score down. Make sure to pay off the unpaid amount and close the account instead of opting for a settlement. You should ensure that the account gets a 'closed' status. Also, it is best to get a formal closure certificate from the lender for the account.
You should check your credit report periodically to understand your credit health. This should be done to ensure that your credit report is free of any errors related to your credit accounts. This is important because any incorrect information recorded on your report could bring down your score through no fault of your own. It is important to identify and rectify such errors at the earliest.
In 2017, the RBI made it compulsory for all the credit bureaus in the country including CIBIL to offer one free credit report to consumers per calendar year. You can get a free copy of your CIBIL report by visiting the official website of CIBIL.
As India’s leading CIC (Credit Information Company), CIBIL enjoys considerable clout in the Indian credit system. But who makes up this prestigious institution?
CIBIL has a diverse ownership structure consisting of well-known banking and non-banking companies. Its major stakeholder is Trans Union International Inc. with about 66% of the total share. The remaining 34% is held by 8 other parties with stakes ranging between 1% to 6% each.
TransUnion deals in data analytics to help businesses in decisioning processes for better risk management. It is also a leader in information management.
|Trans Union Interantional Inc.||66%|
|ICICI Bank Ltd.||6%|
|Bank of Baroda||5%|
|Bank of India||5%|
|Indian Overseas Bank||5%|
|Union Bank of India||5%|
|Aditya Birla Trustee Co. Pvt. Ltd.||4%|
|India Alternatives Pvt. Equity Fund||2.9%|
|India Infoline Finance Ltd.||1%|
An individual’s or company’s credit history is evaluated to generate a Credit Information Report (CIR) from which is derived a credit score known as the CIBIL TransUnion Score. This report and score form an integral part of a lender’s credit approval process. Credit scores range between 300 and 900. The higher the score, the more creditworthy the borrower is, which translates to quick approvals and better interest rates.
CIBIL provides credit reports and scores to those who inquire for them. This includes individuals, institutions and lenders. When an application for a loan or credit card is submitted, lenders check the applicant’s credit scores to ascertain whether it satisfies eligibility criteria. In general, a score of 750 or higher is considered good.
Prior to the introduction of credit information bureaus in India, credit was dispelled based on the apparent creditworthiness of customers. There was little to no tracking of credit histories nor was there any useful analysis or collation of credit data of various borrowing entities. This led to defaults which were loss-making propositions for lending institutions.
As time passed, regulators began emphasising on the need for stricter credit approval mechanisms. Based on recommendations by the Siddiqui Committee, India’s first credit information company was set up. CIBIL has been in operation since the year 2000 and brought in much-needed transparency to the credit system. In 2004, consumer bureau services were launched followed by commercial bureau services in 2006.
The CIBIL TransUnion score was first brought to banks in 2007 and later to individuals in 2011. Two noteworthy services were launched in the year 2010 viz. CIBIL Detect and CIBIL Mortgage Check. These were information databases on activities considered highly risky in nature and mortgages respectively.
Today, almost all banks rely heavily on credit scores from credit bureaus to analyse borrowers’ creditworthiness. By reviewing credit information reports (CIRs), lending institutions are now able to assess and manage risk better. This helps in reduction of NPAs contributing to a healthier overall credit system in the country. Borrowers are now able to access their credit reports and scores to better understand their chances when it comes to being approved for a loan. They can work towards building their credibility before opting for a loan thereby rejecting their chances of rejection. Awareness on CIBIL and its services is on the rise with many initiatives being launched to educate the masses on the need to maintain financial discipline and the consequences of lapses.
CIBIL works with the mission and vision to provide customers solutions that will facilitate making the best decisions, supported by suitable technology and services to make the required information available to them in the best way possible. Even with the presence of other credit bureaus in India, it is always the company’s endeavour to be their audience’s first choice.
A numeric score, released by CIBIL, indicating an individual's creditworthiness. It is calculated based on credit data collected from member financial institutions that have extended credit to individuals in the form of loans or credit cards. Higher the score, stronger the individual's creditworthiness. CIBIL scores a.k.a. credit scores, are widely used as a key parameter when determining a borrower's eligibility for a loan or credit card. Read on to find out how CIBIL scores are computed and how it affects your loan and credit card approval.
A comprehensive report compiling an individual's credit information, sourced by CIBIL from various member lending financial institutions viz. banks and credit card issuers. A CIBIL report a.k.a. credit report contains pertinent information about an individual's borrowing history and repayment patterns including delays and defaults. This report acts as a key source of credit information to assess a borrower's creditworthiness. Information in this report helps an individual understand how his/her credit score has been affected.
CIBIL scores are determined based on a number of factors including how often and regularly you service debt obligations. Find out what impacts your credit score resulting in a good or bad credit rating.
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The right credit score will make you feel right at home at any bank. Home loans are often high quantum, long-term loans that make lenders wary about whose homes they’re financing. What CIBIL score should you have to impress your bank for the most affordable housing loan?
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Fuel your dream ride with a range of car loans that suit your pocket. Walk in with a good CIBIL score and drive away with a new set of wheels.Check if your CIBIL score qualifies you for the car loan of your choice.
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A CIBIL score is a numeric representation of your creditworthiness based on information contained in your report. A CIBIL report is a comprehensive record of your credit transactions based on your credit history. This is just one of the many differences between a CIBIL score and a CIBIL report.
Monitoring credit score, at regular intervals, is pivotal to figure out where you stand. Normally, CIBIL score ranges from 300-900, but it is advisable to score higher than 750 to get approvals on loan application and credit card. Every time a lender updates new information on the credit account, credit score alters. Check your Free Credit Score by following simple steps.
Founded in 2000, the Credit Information Bureau of India Limited (CIBIL) collects a record of an individual’s loans and credit cards. CIBIL, which is ISO 27001:2005 certified, is divided into two divisions, namely, consumer bureau and commercial bureau. The consumer bureau (launched in 2004) has over 260 million records while the commercial bureau (launched in 2006) has over 12 million records. TransUnion International and Dun and Bradstreet are CIBIL’s technical partners.Q. What’s a CIBIL score?
Banks, as part of their due diligence process, gauge the creditworthiness of individuals based on credit scores. The information listed on your credit report includes several variables that CIBIL uses to set your credit score. CIBIL score, therefore, reflects the extent of the probability of a default. An individual’s credit history is submitted to CIBIL by banks and financial institutions on a monthly basis.Q. Is there only one credit bureau in the country?
In addition to CIBIL, there are three other credit bureaus in India, namely, Experian Credit Information Co. of India Pvt. Ltd, Equifax Credit Information Services Pvt. Ltd and CRIF High Mark Credit Information Services Pvt. Ltd. Since all the three have different scoring patterns, your score may vary. Nevertheless, if you have a good CIBIL score, you will get favourable scores by others too.Q. Will checking your score have negative repercussions?
Experts suggest checking one’s CIBIL score once a year. The practice is often considered a ‘soft inquiry’ as opposed to credit card issuers asking CIBIL for your score, known as a ‘hard inquiry’ (mentioned in the ‘enquiry section’ of your report). Also, if you apply for a loan with various banks at the same time, it will result in hard inquiries which may have a negative impact your score.Q. What’s a control number?
The control number is a nine digit unique number that helps CIBIL track your credit report. The control number is generated if and when banks access your credit report.Q. What happens if there is no information available for the details I provide?
If there is no information available for CIBIL to generate a credit report for you, then the money that you paid towards the report will be refunded.Q. How does the CIBIL scoring system work?
CIBIL’s scoring system takes into account all your previous credit information from all types of loans to credit cards, etc. and considers your performance (whether you’ve paid on time or delayed payments, or defaulted on payments entirely) and collates all this information into a numerical score. The score is on a scale from 300-900, and scores above 700 are eligible for loans from most of the established lenders. The closer your score is to 900, the better your chances are of having a loan or credit card approved. In addition to a numerical score, lenders from whom you’ve previously borrowed are able to leave comments about your credit performance against the score. Whether the comments they leave are good or bad is entirely up to you and how manage your finances.
Maintaining a good Credit Score is very important. Let’s give you some ways to improve your Credit Score. Follow these tips and you’re on the right track.
Be Regular With Bill Payments
Start paying those bills on time and your Credit Score will gradually improve.
Foot The Entire Bill
Paying only the minimum amount due on your Credit Card is not a good idea. Pay the full bill.
Increase Your Credit Limit
If you have a lower credit limit and still max out your Credit Card, that hurts your Credit Score. Boost your Credit Limit and use a lower limit. That’s better.
Foreclosing Loans? Not A Good Idea
If you think making a lump-sum payment on your loan will boost your Credit Score, think again. Pay your EMIs on time to show that you have a good repayment history. Ready to improve your Credit Score? Let’s get you started by getting you the perfect Credit Card.
TransUnion CIBIL is one of the leading credit information companies in India. The company maintains one of the largest collections of consumer credit information in the world. CIBIL Score plays a key role in the lives of consumers. Banks and other lenders check the CIBIL Score of the applicants before approving their loan or credit card application. Consumers can visit the official website of CIBIL to check their CIBIL Score and Report.
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