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A CIBIL score is a 3-digit number that assesses your creditworthiness. It has a range from 300-900 and is calculated by the TransUnion CIBIL credit bureau after taking into consideration several factors.
Your CIBIL score is made up of four factors and each of them have a weightage.
| Payment History | 30% |
| Credit Exposure | 25% |
| Credit Type and Duration | 25% |
| Other Factors | 20% |
Know here: How to improve your CIBIL Credit Score
Payment history is one of the biggest factors that can affect your CIBIL score in a positive or a negative way. If you pay your outstanding bills associated with your credit cards and loan EMIs on time, it will boost your score. And if you delay payments or miss payments, it will reduce your score. Hence, such payment behaviour should be avoided to keep your score high. A CIBIL analysis reported by the Financial Express reveled that a 30-day delinquency can reduce your CIBIL score by 100 points.
Credit Exposure which is also known as the credit utilisaiton ratio is the second biggest factor that affects your CIBIL score. Credit utilisation ratio is the amount of credit used by you in proportion to your available credit limit. As per experts, you should ideally use up to 30% of your total credit card limit. A high credit utilisation ratio suggests you are credit hungry and are struggling with your finances. As a result of heavy credit usage on your credit cards, lenders could think that you are at a high risk of turning into a defaulter, leading to subsequent application rejection.
Having a long credit history suggests that you have experience in handling credit. Credit history refers to the number of years that have passed since you have opened your first credit account. Therefore, it is advised to start building credit history at an early stage as it comes in handy when you are planning to buy a house or a car in the future, requiring higher loan amounts.
The type of credit is also considered while calculating your CIBIL score. It is important to maintain a healthy balance of secured (e.g. home/auto loan) loans as well as unsecured (e.g. credit card) loans. When you have secured as well as unsecured credit in your credit report, it suggests that you have good experience in handling both types of credit.
Another factor that is a part of your CIBIL score calculation is hard inquiries. When you apply for credit such as a loan or a credit card, lenders pull out your CIBIL report from the credit bureau. Such an inquiry is called a hard inquiry and multiple such inquires will have a negative effect on your score. You should avoid applying for multiple lines of credit at the same time.
It should be noted that your CIBIL score is one of the factors considered by lenders while sanctioning your application. Therefore, you should take necessary measures to maintain a high credit score. At present, there are several lenders who offer preferential pricing to consumers who have a healthy CIBIL score. With a high score, you have the power to negotiate better deals on credit cards and request for lower interest rates for loans.
| CIBIL Score Range | Meaning |
| 750 - 900 |
|
| 700 - 750 |
|
| 550 - 700 |
|
| 300 - 550 |
|
Ideal CIBIL Score Rating Loans
| Loan | Ideal CIBIL Score |
| Personal Loan | Above 700 |
| Home Loan | Above 650 |
| Loan against Property | Above 650 |
| Car Loan | Above 700 |
| Business Loan | Above 700 |
| Gold Loan | Not Required |
Use credit responsibly:
Avoid late or missed payments:
Maintain a low credit utilisation ratio:
Make sure to close accounts:
Review your credit report:
Yes, your credit score and your CIBIL score are the same. The Credit Information Bureau (India) Limited was the very first credit bureau in the country and so, CIBIL score was a term that was used synonymously with the term, credit score.
SBI does not issue credit scores for its customers. The CIBIL is the credit bureau which collects information from and NBFCs about people and they then calculate the credit score.
If you want to check your CIBIL score with paying any money, you can search for ‘free CIBIL score’ on the internet. You should then fill in all details and once you submit this, you will be able to see your credit score.
You should have a minimum CIBIL score between 650-700 to get a loan.
Yes, a loan rejection will lower your CIBIL score.
CIBIL Related Articles
Care Ratings Ltd. has asked its chief executive officer (CEO) Rajesh Mokashi to go on a forced leave owing to pending inquiry into an anonymous complaint received by the nation’s markets regulator. The anonymous complaint received by the Securities and Exchange Board of India (SEBI). Care Ratings did not mention the nature of the anonymous complaint or what it pertained to. It is speculated that the complaint could be related to the Infrastructure Leasing and Financial Services Ltd (IL&FS) controversy. Earlier this month on 2 July, ICRA credit rating agency and the local affiliate of Moody’s Investors Service, sent its MD & CEO Naresh Takkar on leave as a result of a pending an enquiry into “anonymous" allegations against the executive.
Care Ratings’ board of directors has decided to appoint T.N. Arun Kumar, currently executive director (Ratings) as interim chief executive officer ("CEO") of the company. The credit rating agency stated that Kumar will not be part of rating operations to ensure independence of ratings. The NBFC market has been under the scanner and disrupt the financial market after the IL&FS debt fraud in September last year. Three agencies – India Ratings & Research, ICRA and Care – had given IL&FS the highest rating of AAA, even when its subsidiary, IL&FS Transport Networks, had defaulted in June 2018.
19 July 2019
Credit rating agency, CRSIL predicted that non-performing assets (NPAs) will come down to 8% by the end of March 2020. This is a major development in the banking sector that’s been bogged down by bad loans. As per reports, bad loans in the banking sector peaked at 11.5% in March 2018. The credit rating agency said in its report that the reduction will be triggered by gradual decrease in fresh accretions to NPA coupled with measures taken to recover funds from existing NPA accounts. CRISIL further stated that the NPAs will decrease by 350 basis points over the course of two years, bringing it down to 8% by the end of the fiscal year 2020.
The report further stated that public sector bank NPAs are poised to register a dip of 400 basis points, bringing it down to 10.6% by March 2020. In the previous financial year, bad loans in public sector banks were registered at 14.6%. Reports revealed that this is primarily because of RBI recognising around Rs.17 trillion stressed/bad loans and imposing stringent norms and reviews for quality of assets. RBI is constantly keeping a tab on bad loans and initiated prompt corrective action (PCA) on as many as 11 public sector banks, sources suggest.
27 June 2019
ICRA has downgraded long-term ratings of IDFC First Bank owing to weak earnings. The credit rating agency slashed IDFC First Bank’s Rs.38,670 crore of non-convertible debentures to AA from AA+ with a stable outlook as a result of weak earnings and on higher provisions due to stressed exposure. ICRA said in a statement that the bank’s weak earnings profile and elevated cost-to-income ratio because of the ongoing branch expansion has been responsible for pressurising the operating profitability. The downgrade includes Rs.28,689.73 crore of Non-convertible debentures (NCDs) of the erstwhile Capital First and Capital First Home Finance, and another Rs.10,000 crore of NCDs of the former IDFC Bank. The bank’s cost-to-income ratio recorded an increase by 80% in the March quarter. However, its core income managed to increase by 2.8% on a sequential basis.
The credit rating agency added that IDFC Bank had a strong growth in current account and savings accounts (CASA) deposits, however, its share in overall liabilities continued to be low resulting in higher cost of interest-bearing liabilities compared to other banks.
23 May 2019
IRDAI (Insurance Regulatory and Development Authority of India) chairman Subhash Chandra Khuntia has urged companies to go beyond the credit ratings of their investment and instead apply their own judgement. The statement was given by the IRDAI chief following the IL&FS debt situation, as per reports. Post the debt scam, insurers have been asked to make adequate provisions in proportion to their exposure to IL&FS. The IL&FS instruments were AAA rated at the time of investment, however, in the next 3 months, its long term ratings were also downgraded by the credit rating agencies.
Following the IL&FS scam several group entities have seen downgraded ratings missed a series of debt payments. IL&FS has a cumulative debt of Rs 91,000 crore. The IRDAI chief also said that insurers have been asked to not pull out of investments once there is a change in the credit rating. The regulator has also asked insurers to bring out a risk registry wherein each insurer will list out the type of risks they face and the possible solutions for those risks. Khuntia also said that this will act as a guidance to insurers.
5 March 2019
India will struggle to meet the fiscal deficit target of 3.4% in 2019-20 as higher oil prices will add to short-term fiscal pressures, as per Moody’s. The credit rating agency also stated that the government will struggle will find it difficult to maintain higher spending and low revenue growth. Said a report from PTI. Gene Fang, Moody's Investors Service Managing Director, Sovereign Risk Group, said the country’s debt is high as a percentage of GDP and it could be brought down only if the Centre sticks to the fiscal consolidation path. The credit rating agency said the country's 'Baa2' rating has a 'Stable' outlook, which indicates a balance of upside and downside risks. As per the FRBM Act, the debt-to-GDP ratio was to be brought down to 40% by 2024-25 from 50.1% in 2017-18. The government of India has pegged the fiscal deficit for the next financial year at 3.4% of GDP, as against the original target of 3.1%.
Fang told PTI that the 3.4% fiscal deficit target for the year ending March 2020 is wider than expected, largely driven by increased spending to provide income support to small farmers and tax rebates ahead of the general elections in April-May this year. In 2017, Moody's had upgraded India's rating to Baa2 from Baa3, changing the outlook to 'stable' from 'positive', and said that reforms will help stabilise rising levels of debt.
4 February 2019
My credit score is different? What do I do? A credit score expresses an individual’s financial stability and debt reimbursement capabilities. It is determined by credit rating agencies, which are in four in number in India and have been created by the Central Bank of India. These credit rating agencies will rate individuals based on different credit scoring modules. An individual shall be rated differently since credit scoring modules used by credit bureaus will slightly vary in terms of priorities. Due to which, an individual is rated differently, but ratings offered by all credit rating agencies are equal.
The people looking to apply for personal financial products should have a fair idea on credit scores and should monitor them periodically. The best thing they can do is to obtain a free copy of credit report once a year. Thereby, you can understand where you stand in terms of your credibility. Be sure to have a good credit score always if you are willing to apply for a long-term personal financial product. A good credit score can be built and managed. You can obtain a free credit score online. So, make sure to check credit scores.
5 February 2018
In order to aid employee screening and e-Commerce companies make informed and faster decisions based on the individual’s credit behaviour, TransUnion CIBIL has partnered with these firms with the intention of utilising data in order to make better and quicker screening decisions. On e-Commerce portals, the credit screening application happens, as of now, after the consumer provides his/her application. But with the new initiative, consumers will have access to CIBIL Score and Report and not just offers that they are eligible for.
This in turn will decrease the rate of rejection on all applications and thus ensures that the process is faster, much more efficient and easier as well. In order to encourage transparency and also create awareness, the CIBIL Score as well as report will be shared with customers without their having to pay additional charges.
18 April 2017
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