CIBIL TransUnion Score 2.0

CIBIL score is a measure of your creditworthiness. It is an important tool that makes you eligible to borrow credit in the form of a loan or a credit card. A CIBIL score is calculated by the TransUnion CIBIL credit information company (CIC) also known as credit bureaus. In October 2012, TransUnion CIBIL launched a new version of the CIBIL score called “CIBIL TransUnion Score 2.0”. The new CIBIL scoring model aims to predict the risk of lending credit in a more detailed way with the score customized for the changing Indian market.

The CIBIL Score 2.0 is designed after taking into consideration the current trends in the Indian market and changes in the consumer profiles as well as credit data. It helps lenders score the borrowers with greater accuracy and measure the risk in a more effective way. The newer version of CIBIL has been introduced to cater to the current shift in borrowing trend. There has been a change in the ratio of secured and unsecured loans as borrowers are slowly moving from credit cards and personal loans to home and auto loans.

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What is New in CIBIL TransUnion Score 2.0?

CIBIL Score 2.0 introduces a new risk index for first-time borrowers. In the older version of CIBIL, the CIBIL score for all first-time borrowers with less than six months credit history was zero. However, in the case of CIBIL Score 2.0, it rates borrowers with less than six months of credit history in a different range. The new scoring model of CIBIL allows lenders like banks, financial institutions, and non-banking finance companies (NBFC) to offer loans to individuals with a better understanding of their ability to repay the borrowed amount. Also, CIBIL Score 2.0 encourages an inclusive financing approach by offering credit to more individuals who have no credit history.

Features of CIBIL Score 2.0

As per the risk index, borrowers with less than six months of credit history will be rated on a scale of 1 to 5. This helps lenders classify first-time borrowers into high, medium, and low risk. A score of 1 suggests the borrower is at the highest risk of turning a defaulter and a score of 5 suggests he/she is at the lowest risk.

Risk Index Meaning
-1 or NA/NH
  • Individuals with no credit history
  • Credit bureau has not received any credit information in the last 24 months
1 Highest risk of turning a defaulter
2 High risk of turning a defaulter
3 Medium risk of turning a defaulter
4 Low risk of turning a defaulter
5 Lowest risk of turning a defaulter
300-900
  • Individuals with a credit history of more than 6 months
  • 300 is the lowest credit score and 900 is the highest credit score

Advantages of CIBIL TransUnion Score 2.0 for Lenders

With CIBIL Score 2.0, lenders get an opportunity to improve the quality of their lending decisions throughout the customer lifecycle. It acts as an important tool to approve credit and define credit terms for first-time borrowers. Moreover, the new scoring of the CIBIL model improves cross risk management for lenders and helps them take sounder decisions.

Advantages of CIBIL TransUnion Score 2.0 for Borrowers

It must be noted that if you check your score with CIBIL Score 2.0, it may be lower than the older version. However, you should not worry, as the scores have been adjusted according to the new scoring method. Also, the difference in the new and old version of credit score will not impact the lender’s credit decisions at the time of the loan approval process. This is mainly because lenders may have a different loan eligibility criterion depending on the version they are using. You should check your CIBIL score from time-to-time to get an idea of your credit health. It is advised to check your CIBIL score especially when you planning to apply for a loan.

The CIBIL TransUnion Score 2.0 is accessible across channels web and online. It’s available with CIBIL Credit Information Reports, CIBIL Portfolio Review Reports, or CIBIL TransUnion Bureau Credit Characteristics.

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