The Credit Information Bureau (India) Ltd, better known as CIBIL, is the premier agency for providing credit reports and scores pertaining to individuals. CIBIL sources financial data of individuals such as loan and credit card information from leading banks and other financial institutions in India. This data is then presented in the form of a CIBIL credit report, also known as a Credit Information Report (CIR).
CIBIL was incorporated in 2000 and has continued to expand its presence throughout the country. It is backed by TransUnion International and Dun and Bradstreet, which are major global credit bureaus and agencies.
What is CIBIL Score / credit score?
CIBIL Credit score is a numerical expression that is based on your credit files which represents your creditworthiness. It includes all the details of the credit that you have acquired throughout the years. It also shows how much credit you have taken and how you have repaid it. It will also show if you have missed making any payments or if you have settled any loan. It contains your debt and repayment history along with all your relevant details.
Credit score is calculated based on your credit report based on the intensive in-house algorithm calculations. One of the oldest credit rating agency is Credit Information Bureau or CIBIL. CIBIL scores their ratings from 300-900, 300 being the lowest. Equifax is another such credit rating agency, they score between 1 – 999 points.
CIBIL scores are calculated on the basis of at least 6 months of historical financial data of an individual. The data is fed into an algorithm with 258 different variables; each with a different weightage.
The other credit rating agencies are Experian and Crif Highmark. All the agencies are approved by the Reserve Bank of India and offer credit report services to the banks and the other financial institutions.
What is a CIBIL Score?
A CIBIL Score is a numeric summary of credit history that is calculated based on the following factors:
|Track Record of Past Payments||
|Previous Settlements, Defaults, Write-offs||
|Loans as Proportion of Income||
|Secured Loans vs. Unsecured Loans and credit cards||
CIBIL Score Range
A CIBIL score can range from 300 to 900 with 300 being the bottom end and 900 being the best score possible. Here is what your score could mean.
0 or -1: If your score is 0 then it just means that you have no credit history created via a credit card or loans. You might want to consider taking one so that you can get a credit history going.
350 – 550: Alarm bells should be ringing because this is a bad score. It means you have been defaulting on payments and the chances of getting new loans/credit cards are minimal.
550 – 650: This is an acceptable region to be in since it indicates that you are fairly regular with your payments and can be trusted with new loans and cards. Your loan applications are also likely to be approved.
650 – 750: You are on the right path. You will not face too many problems with loans and credit cards and should you stick to your current habits, you could reach the best CIBIL scores too.
750 – 900: This is the best range to be in since it means that you are a financial guru. You are regular with credit payments are have a really good payment history. Banks will tend to be very will to offer you credit products with such a score.
- It helps in analysing your true financial standing and make plans for future finances.
- You can be on top of your borrowings and avoid debt traps.
- With a CIBIL score in hand, you are in a great position to make decisions regarding availing new forms of credit, while also being able to extract the best possible rates from banks or other lenders.
- It helps in cultivating financial discipline.
Things that positively affect your credit score
- On time loan EMI payments.
- Regular payment of credit card bills.
- Paying credit card bills in full rather than paying minimum due amount every time.
- Avoiding over-leveraging.
- Maintaining strong financial records.
- Too many forms of credit (such as unsecured personal loans) among family members.
- Proper utilization of approved credit limit.
- Ensuring banks and other financial institutions you’re dealing with record and submit positive information to CIBIL.
- Requesting and maintaining a copy personally rather than through financial institutions.
Things that negatively affect your credit score
- Too many credit report enquiries by banks and other institutions.
- Cheque bounces/dishonours.
- Irregular loan repayments.
- Defaulting on credit card bills/ making late payments or consistent part payments.
- Too much unsecured credit such as multiple personal loans.
- Multiple applications for unsecured loan getting rejected.
- Defaulting as a guarantor.
- High utilization of approved credit limit or overshooting the limit.
- Errors in record by banks and other finance institutions.
- Easy availability of credit such as loans. According to the official CIBIL website, about 90% of loan applicants with CIBIL score greater than 700 are approved for loans.
- Quick processing of loan and credit card applications.
- Ability to negotiate interest rates owing to your strong financial standing.
- Though not guaranteed, the possibility of negotiating or waiving processing fees as well as choosing prepayment options.
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How to get CIBIL credit scores online
CIBIL credit ratings can be checked online by following a few simple steps, as outlined below.
- Log on to the official CIBIL website and click on Know Your Score.
- Fill up the online form which asks for details such as name, date of birth, address, id proof, past loan history and other relevant data.
- On filling the form and accepting changes, you will be taken to the payments page. You can choose from multiple modes of payment such as prepaid cards, credit cards, net banking etc. A payment of Rs.470 has to be made to CIBIL to get your credit report.
- After successfully making the payment, you will be taken to an authentication page. Here, you will be required to answer 5 questions related to your credit history of which you will have to answer at least 3 questions correctly to authenticate your identity with CIBIL. Your report will be sent to your email address within the next 24 hours.
- If authentication fails, you can fill and send a hard copy of the application to CIBIL by mail. You will subsequently also receive the report by mail.
To obtain your credit score and credit report you will need to contact the credit rating agency in India, CIBIL. They will be charges involved to obtain a credit score and credit report. Any individual wanting this report will need to pay an amount of maximum Rs. 500 to obtain this report, the application process with payment applies to both individuals and institutions. Let’s say a bank or financial institutions needs your credit report with your score to check your loan eligibility, even they will need to make a payment for that copy. There are a few websites that will promise to give you, your credit report and score for free, but will ask you to sign up with them or become a member of their website etc.
Difference between CIBIL Report and CIBIL Score
A CIBIL report, also known as a Credit Information Report (CIR) is a document listing all your borrowings and repayment histories. The CIBIL score or rating is derived out of this data as well as other variables that affect your financial position.
CIBIL scores have become the benchmark for credit worthiness in India. While CIBIL was the first Indian credit bureau, other international players have also started providing credit scores in recent years such as Experian Credit Information Company India Pvt Ltd. The importance of credit checks should not be undermined.
The credit report is a report that includes your credit score as well as other details on all your financial transactions related to credit. Your credit score is just a part of the report, which has a 3 digit number which will be anywhere in the range of 300 - 900. The credit score is a depiction of your creditworthiness, while your report will include payment history, number of loans, your outstanding balances of any loans, total of your credit limit, loan details of all loans taken from a diverse pool of lenders. The credit report is more like a report card for your credit, and the credit score is like the percentage you get on your report card. The higher your credit score is, the better it is for you. An average score of 750 is considered good for lenders to provide you with good deals and better rates of interest.
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. What do high and low credit score determine?
A high CIBIL credit score essentially means less probability of a default. A low CIBIL credit score reflects high probability of a default.Q. How can you get your CIBIL score?
Log on to the CIBIL website and click on the ‘know your score’ tab to get a personalized credit score. Fill an online form which requires you to include details such as your name, date of birth, income, identity proof, address and phone number, in addition to the loans taken by you. Following payment of a certain sum, you will have to submit authentication details which include questions based on your credit history. After authentication, your credit score will be emailed to you.Q. Will opting for a credit card decrease my score?
If you have a zero outstanding balance on your old credit card, there is no reason to unduly worry about it and close it. If you have a credit card with a clear payment history, it will not only reflect your responsible credit behaviour but also keep your utilization rate low, which impacts your score positively.Q. Does zilch credit mean a good score?
There are many who avoid loans like the plague, hoping that their CIBIL score will then be perfect. Nothing can be farther from the truth. If you do not borrow, you do not have a credit history and, therefore, no credit bureau can assign a score. Consequently, you might find it difficult to get a loan. Timely repayments are of seminal importance to ensure that your score remains above 750.
Q. How to check CIBIL score without paying fee?
The fact is, CIBIL does not furnish your CIBIL report or score without levying a fee for the same. There are online websites and tools that offer to estimate your credit score based on certain input parameters but this score is just an estimated figure and not your actual CIBIL score. Actual score can only be obtained by paying the required fee.
Q. Why is CIBIL score important for customers?
Credit score is a distinct numeral assigned to each individual based on analysis of his/her credit report. A higher credit score signifies a health credit history and a lower score signifies a bad credit history. Any score between 700 and 900 is considered good while that below 700 needs to be improved in order to come in the good books of lending and banking entities. You CIBIL score depicts your credit-worthiness as a customers and is hence an important numeric figure. This score is looked up by banks when you apply for any credit channel like loan or credit cards.
Q. How is CIBIL score calculated?
CIBIL score is calculated by the Credit Information Bureau India limited in conjunction with various registered credit bureaus of the country. The score takes into account your payment history, payment pattern, your existing credit channels and the amount of credit that you own.
News About CIBIL Score
Credit score will be deciding the amount of home loan EMI for you
The rate of interest that you have to pay for your home loan will be linked to the credit rating system. So, the discipline that you maintain while paying off your debt or outstanding balance will determine how much interest will be associated with your home loan. If the credit score goes down, will have to pay more interest. If the credit score goes up, you will have to pay lower interest.
Bank of Baroda is going to be the very first bank that links credit score to home loan. At present, banks will depend on the data provided to them by CIBIL (Credit Information Bureau of India).
11th January 2017
CIBIL Scores To Become More Important To Individual
While banks and other lenders have been using CIBIL score to decide if a loan application is to be approved or not, such approvals will get dearer now since Bank of Baroda has decided to switch to ‘scoring based pricing’. The bank’s M D, P S Jayakumar, said that they were already using this method where they would decide the cost of the loan based on the CIBIL score of the applicant. WHile such a system is not a new thing, it was only being used for corporate customers, however, now it will be used in retail lending as well. He also said that switching to this method will allow the bank to make their due diligence obligations easier to manage and also reduce the possibility of approving a loan that may end up in defaults.
19th July 2016
Bank of Baroda to Issue Loans Based on Credit Score
Bank of Baroda plans on introducing credit score-based lending to the retail mortgage sector. Under this policy, the bank will issue loans based on individual credit scores instead of a uniform rate that does not take into account credit quality.
The move has already begun, with the bank announcing that it had made the switch internally and would start issuing loans based on CIBIL scores.
The aim behind this move is to reduce the number of loan defaulters and enable banks to improve their retail loan portfolio.
While corporate borrowers have been issued loans based on credit score, retail segments in the Indian market have not been grouped under this policy.
In this way, loan applicants with a good credit score can avail loans that are a possible 50-75 basis points lower than those with a poor credit score.
14th July 2016
CIBIL Expands its Reach in Micro and Small Loans Segment
CIBIL will start providing solutions and information to micro and small lenders so as to enable them to make sound decisions, to drive credit penetration and to increase their base of customers. According to the MD and CEO of CIBIL, Satish Pillai, by growing their reach, CIBIL will be able to provide better solutions, information and insights so as to help increase their reach.
The President of Microfinance Institutions Network, Manoj Kumar Nambiar believes that the foundation of all lending based decisions is credit information and CIBIL’s decision will help drive micro and small lenders forward and to reach greater heights. Availability of solutions and insights from CIBIL has contributed significantly to growth in credit segment which increasing penetration of credit and inclusion of finances. According to CIBIL Insights, retail loans have increased at an average CAGR of 28 percent over the previous three years.
29th June 2016
CIBIL Detect: India’s first Fraud Database
CIBIL, along with TransUnion, has launched a database for fraud detection called CIBIL Detect. This is India’s first centralized repository for information on confirmed frauds, high-risk cases, suspected fraud cases, cases under investigation, misuse of data, or attempt to misuse data. The repository will also house information on vendors and agents that are of elevated risk. Credit grantors, banks and financial institutions will be able to share and access this information. The system will also keep a record of the modus operandi of bank-related fraud by criminals or suspects in the past. Better collaboration and sharing of this kind of information was much needed in the financial and banking industry. CIBIL Detect will work nationwide and protect banks and financial lenders as much as possible against fraud.
28th June 2016
SBI To Permit Education Loan Defaulters To Apply For Jobs
Job applicants who have defaulted on their education loan repayments may be permitted to apply for jobs with the State Bank of India as well as any of its associate banks. Managing Director of State Bank of Hyderabad, Santanu Mukherjee, stated that the recruitment process would probably be reconsidered, only with regards to education loan defaulters. However, candidates with a poor loan repayment or credit card history, as well as poor CIBIL scores will not be eligible to apply for said jobs. Bank Employees Federation of India general secretary Pradip Biswas also stated that candidates who have defaulted on their education loans should not be clubbed in the same bracket as other defaulters, since they are dependant on employment to make repayment.
4th May 2016
Credit History set to play a role in SBI recruitment too
All those who wish to avail a job with the prestigious State Bank of India will now need to maintain a healthy credit history too. The most popular public sector bank of the country has come up with this while recruiting for the posts of Junior Associates. Apart from this, those candidates who have reports regarding character and moral grounds are also not eligible to apply for any post with the State Bank of India.
The bank has advised job seekers to check their credit reports with CIBIL before applying for any open positions with SBI. However, relaxation will be offered to job applicants who have availed education loans and have not fully repaid those yet. The move comes in the backdrop of rising bad loans and NPA for State Bank of India.
27th April 2016
CIBIL Data shows Growth in Retail credit sector
Arundhati Bhattacharya, chairman, State Bank of India (SBI) has asked industry experts to stay cautious of the fact that the security of consumer-related data will be the epitome as technology advances further.
In the 8th Annual Credit Information Conference, which was organized by the two credit data research companies TransUnion and CIBIL, Arundhati was quoted saying “As we become more dependent on technology, the safety of data will be paramount; the more security backed we become, people keen to breach it are a step ahead,”
She believes that gathering data will become more difficult due to this growth that has been observed by the data provided by the Indian credit analytics company CIBIL.
15th March 2016
CIBIL launches “iScan” – Corporate Credit Reports
The Credit Information Bureau of India Limited (CIBIL) recently launched the iScan Credit Report which contains details of a corporate entity’s credit history.
A comprehensive and exhaustive report of all credit-related behaviour by corporate entities, the iScan report considers dealings with all financial and credit-oriented institutions.
The report helps lenders and credit institutions make informed decisions when it comes to opening current accounts for companies, or extending credit to corporate entities.
10th March 2016
CIBIL looking at more avenues to get credit behaviour data
After the collaboration with the MFI credit information bureau, CIBIL is looking to add more avenues or sources that can provide credit behaviour data. The possibilities of this avenues that are being targeted are the telecom and utility service providers, even the behavioural social media patterns will be used by banks, others to analyse credit behaviour. The Reserve Bank of India has made mandatory procedures to curb losses in the industry with diversion of funds. To extend credit facilities to other bank’s customers banks will need to procure a NOC from the customer’s previous bank. New tracking method called CIBIL iScan is set to be launched by CIBIL. After discussions with the credit bureau and Indian Banks Association, iScan will help keep track of the new current accounts opened by corporates.
25th February 2016