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||
TIPS to Get a Great Credit Score
A great Credit Score is anything above 800. If a bad Credit Score is the bane of your life, you can use the following tips to send it soaring. Want to know your score?
- Be Disciplined Credit Card and loan repayments have the strongest impact on your Credit Score. Make sure you always pay your dues on time.
- Be Frugal Keep your credit utilization ratio at 30% for a good Credit Score. If you are struggling to stay within this limit, then get a card with a higher top limit.
- Seek Variety A combination of secured and unsecured debt will send your Credit Score upwards. A Credit Card is an unsecured debt whereas a Car Loan is a secured debt.
Advantage of Old Credit Card Accounts Think twice before you close an old Credit Card account as long running accounts add more value to your Credit Score. And if you are not using your card, keep it safe to prevent misuse or fraud. Follow these tips to get a good Credit Score. Not sure about your score? Click the link below to check it at no cost at all!
3 Essential Tips to Enhance Your Credit Score
Credit score can play miracles when you decide to apply for a loan or credit card. And as the year commences, keeping your credit score on track since the beginning can help you increase the chances of getting a loan approved easily. The most important is to check your Credit Score at regular durations from various credit bureaus. Avail either free CIBIL score or subscription based CIBIL score to tread cautiously.
CIBIL score ranges from 300-850. CIBIL score as high as 750 and above is good for a loan application and below 500 can prove negative for you. Maintaining a healthy credit score is of utmost importance. Here are the three essential points that can help you enhance your credit score:
- By Paying all Bills on Time: This is one of the most important steps that can drastically boost your CIBIL score. Just be disciplined in paying off all your bills on time. Never pay partial amounts as it may showcase you as undisciplined credit payer and edge down your credit score.
- Don’t Apply for new Credit Card or Loan: When you plan to apply for a loan or credit card application, never enquire in too many banks or financial organizations. This may consider you as credit hungry. Though it is important to enquire and then apply, but it may affect your credit score and result to bring trouble in credit card/loan application.
- Check your Credit Score: It is advisable and important to know where you stand. So, monitor your credit score by applying for subscription based credit score. You can also track your score by using free CIBIL score report from the leading credit bureaus of the nation.
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.
- Credit Reports cannot be Assumed to be Accurate Always
- Credit Utilisation Ratio has Nothing to do with Rating
- Ignoring Secured and Unsecured Loans
- Delayed Payments make no Difference
- Building Credit Without Credit
- Closing Old Accounts is a plus
- Standing as a Cco-applicant has no Impact
What makes you more potential to be chosen by lenders to grant a loan or to extend the credit card limit? A good Credit Score it is. Assessing the creditworthiness of an individual mathematically is called a credit score, which is usually in the range of 300 to 900. Credibility or creditworthiness is assessed whether or not to offer a financial product that requires to be repaid over a period of time. A person with a good score has an upper hand over a person with a bad score in terms of banking.
Credit scoring is based on credit reports that contain a detailed financial history, including personal information, active and inactive bank account details, missed payments, delayed payments etc. Banks, NBFCs or licensed lenders with whom you transact with will submit report to credit rating agencies. Rating is done according to the criteria set by each agency. There could be a minute variation in ratings, but all ratings are considered equally valid. It is good to be well-rated. Keep your credit scores healthy. Do not consider the following assumptions that ruin your credibility:
Under no circumstances, you can assume your Credit Reports to be correct and valid always. You are entitled to get a free copy of credit reports annually. Have them handy and review carefully. As mentioned earlier, the information contained in credit reports is massive and should be checked for completeness and accuracy. Outdated, wrong or inaccurate information should be rectified.
A credit utilisation ratio expresses the relation between the amount of credit granted and the actual credit usage. Anything between 30-35% is considered feasible. For instance, if the sanctioned credit limit on your credit card is Rs.100,000, the actual usage should not exceed Rs.35,000 to avoid the consequences of being considered an unsafe financial behavior. People take it for granted. Be cautious while spending more than the cutoff ratio.
Credit card companies and lenders like to observe how effectively you manage various categories of financing. Build your Credit Score through a portfolio of properly balanced secured long-run loans such as housing mortgages and auto loans; and unsecured revolving mortgages like personal loans and credit cards. For instance, making credit card payments in full in lieu of utilising the facility of revolving credit is considered positive.
People tend to delay payments assuming assuming that have no impact on credit rating. It cannot be done. Deferred payments are a poor practice and reflect an inability to make payments in time. The more the delay, the more shall be the impact on your credibility. Set payment reminders for yourselves to ensure timely payments.
Bankers would want to see your previous repayment history. It is tough to build credit with no credit history. Staying away from any type of debt completely might not always be in the interest rate of lending companies. The evidence for previous payments can put you on a higher scale.
People assume that closing old accounts like credit cards gives a boost to creditworthiness. It is wrong. Holding and maintaining old accounts mount the average lifespan of your credit history and impact your credibility positively.
Standing as a co-applicant seems reasonable as long as you are sure that the principal borrower can repay debts. The payment obligation will be shifted to you if the principal borrower fails to make payments. It impacts your credibility.
- 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.
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.
Q. Is it possible for the CIBIL Score to change?
The CIBIL Score will change based on the various factors such as any change in loan/credit account, credit repayment history, missed payments, etc. The score can also change when your lender carries out a hard check on your credit report. The information collected from various financial institutions and government agencies is received by CIBIL on a monthly basis. These financial institutions and government agencies are liable to provide credit/loan information of an individual to credit bureaus across India. Based on any information regarding a change in your financial creditability will cause the change in your credit score.
Q. Is there any other credit bureau apart from CIBIL that provides credit score/report in India?
There are three other credit bureaus in India apart from CIBIL. TransUnion CIBIL Limited is the oldest credit bureau that has been providing the individual credit score to lenders such as banks to check repayment capabilities of an applicant. The credit score generate by TransUnion CIBIL Limited is called a CIBIL Score, however, the credit reports and scores can also be taken from the other three credit bureaus such as - Experian, Equifax, and CRIF HighMark. They collect the financial information of an individual from various financial institutions and establishments to calculate and generate the credit scores and reports.
Q. What is Credit Information Report (CIR) and how it different from CIBIL Score?
Credit Information Report (CIR) is the complete summary of your credit history based on the last 5-7 years of credit and loan accounts. The CIR also contains personal and credit/loan account details including the inquiries’ made by lenders for your credit/loan application. The CIR is a record of your EMI repayments and/or credit card payments. The CIBIL Score is a part of the CIR. The score is an indication of your credit/financial health that is calculated based on the various factors that prepare the CIR.
Q. Who can access your CIBIL Score?
Your CIIBL Score can only be accessed by CIBIL Members such as certain banks, your lender, you, and other authorized establishments. These members are required to access the credit report/score only when you apply for a loan or a credit product. Apart from the banks, you can access your credit report/score by making a payment either to CIBIL or to any other credit bureaus.
Q. How can I check my CIBIL Report?
You can request for your CIBIL report by visiting the www.cibil.com. You will need to enter personal details such name, PAN card number, date of birth, gender, etc, clear the personal verification process, and make a fee payment in order to access your credit report. CIBIL provides credit reports online as well as a physical copy of it that is sent to your address. Currently, you can access your CIBIL report for free by requesting for it under the once a year 'free' offer.
Q. Why are the PAN card details required to check the CIBIL Score?
PAN Card is one of the unique identifiers that is related to all types of financial activities. Whether you are opening a bank account, transacting for a higher value, or taking a loan or credit card, PAN card is required for all these types of application. The credit bureaus in India use PAN card as the major tool that helps in identifying individuals when they are requesting for their credit report. If you are planning to obtain your credit report/score, make sure that you have your PAN card details with you.
Q. How can I get the CIBIL Score for free?
If you are requesting for your CIBIL for the first time in a year, you can get it for free. CIBIL offer once a year free credit score upon requests. There are no other websites that can provide you with the CIBIL Score for free. You will need to visit the CIBIL website www.cibil.com in order to request for your credit score/report.
Q. How CIBIL gets the information of your credit/loan history?
The CIBIL Members such as banks and other government agencies provide financial information of an individual on a monthly basis to CIBIL in exchange for the access to the credit reports and score prepared by CIBIL for determining their loan/credit applicant's financial credibility. CIBIL collects your financial information related to loans and credit accounts from your bank.
Q. Will there be any impact to my Credit Score when I check?
No. When you requesting for your own credit score/report, this is considered to be a soft check that doesn't have any impact on the credit score. But when you apply for a loan/credit, and your lender carries out a check, that'll be considered as a hard check. A hard check can impact your credit score negatively. If your loan application gets rejected, it is advisable not to immediately check with other banks, more hard checks can cause further damage to your credit health.
Q. Why do the lenders need to check the CIBIL Score?
While reviewing the loan/credit applications, it becomes essential for the banks to consider the repayment capability of an individual. The credit score and report helps the lenders determine the repayment capabilities of an individual. By referring to the credit score, the banks can identify the applicant repayment habits and decide whether the application can be approved or rejected. The CIBIL Score can be one of the deciding factors involved in determining the interest rate, credit limit, and other essential parts of the loan/credit account.
Q. What kind of credit/loan account details are included in the credit report?
A credit report will contain details of your credit and loan accounts. Even if you have closed a credit/loan account in the past, the credit report will include details of that account. The report will show the total credit/loan amount, EMI details, missed/late payment, lender’s name, and other related information. There could be instances where the details entered in the credit report are incorrect, you are advised to get in touch with the credit bureau to remove the incorrect details.
Q. How to remove errors or incorrect entries from the CIBIL Credit Information Report (CIR)?
If you have reviewed your Credit Information Report (CIR) and found errors or incorrect entries, you can get in touch with TransUnion CIBIL Limited directly to get it corrected. TransUnion CIBIL Limited will review your request and make necessary changes on receipt of a nominal fee. If you are planning to apply for a home loan, credit card or any other loan/credit product, you are advised to review your CIR so you can fix errors and get your credit score/report updated. You can file a dispute for the scrutiny of the information on your CIR, the credit bureau will carry out a check and update the CIR accordingly.
Q. Is it possible for CIBIL to delete or amend my credit information independently?
CIBIL is not allowed to delete or make any changes to the Credit Information Report (CIR) independently. CIBIL collects information from banking as well as non-banking financial companies to prepare CIR. The CIR might have incorrect entries or incorrect details that are collected from the CIBIL members, in that case, once you contact CIBIL to rectify the error, they will obtain clearance from the members along with necessary documents to make changes to the CIR. Hence, you are advised to review your CIR periodically to ensure your credit score is up to date.
Q. What is CIBIL 2.0?
CIBIL 2.0 is a new scoring model that TransUnion CIBIL Limited uses to calculate the credit report for individuals. Individuals with a new credit history of 6 months or lesser are assigned a score based on the risk factors involved in lending to new borrowers. The CIBIL 2.0 offers a risk index of 1-5 to individuals with new credit history, the higher the number, the risk of defaulting is lesser. The CIBIL 2.0 is designed to match the current economic and credit trends.
Q. How can the CIBIL Score affect my application for a new loan or a credit card?
Currently, when an individual applies for a loan or credit card, the lender (bank) will carry out a credit report/check to make sure the borrower has a positive record of credit repayment. The bank may refer to any of the credit bureaus to obtain a CIR of an individual. Based on the credit score, the bank may decide to approve your reject your credit/loan application. Though the credit score is not the only factor that decides whether your loan/credit is getting approved or not, it is one of the important factors that your lender will look into. A poor credit score will have more chance of loan application rejection compared to a healthy credit score.
Q. What is a good CIBIL Score?
The CIBIL Score ranges from 300 to 900 where 300 being a bad credit score to 900 being the best. A CIBIL credit score of 750 and above is considered to be a good score and has more chances of the loan application getting approved. If your credit score is bad, there are various methods that you can use to improve the score.
Q. What is minimum CIBIL score required for the approval of personal loans?
The banks and Non-banking Financial Companies (NBFC) do not publish the minimum credit score required for loan approvals, however, they do look into your credit score to make their credit lending decisions. A CIBIL score of 750 and above is considered to be a good credit score, however, the approval will still depend on other factors such as loan amount, employment status, credit history, etc. It is recommended to review the credit score periodically so you can identify the factors that are improving or decreasing your credit score. A credit score that is close to 900 has more chances of a loan application getting approved.
Q. What is minimum CIBIL score required for the approval of home loans?
Since banks and NBFCs are not required to publish the minimum threshold of a credit score for home loans, you are recommended to review your credit report/score and take necessary steps towards improving it. The credit score/report is a part of the loan application review, the banks have the liberty to take an independent decision based on their records as well.
Q. For how long CIBIL keeps the record of the defaulters?
CIBIL is not required to publish the record of the defaulters, however, the CIBIL CIR contains the details of the defaults of a particular individual. The details of such defaults are on record for a maximum of seven years. Any information that is over seven years old is not included in the CIR.