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Introduction to CIBIL Score

Established in 2000, TransUnion CIBIL Limited (formerly known as Credit Information Bureau (India) Limited) is the premier agency for providing CIBIL scores and CIBIL reports. It maintains the records of all credit-related activities, like loans and credit cards, of individuals and companies. These records are provided by banks and other financial institutions on a periodic basis, and based on this data, the credit bureau issues the reports and scores.

What Is CIBIL Score?

CIBIL score is a three-digit numeric summary of your entire credit history. It ranges from 300 to 900, with 300 being the lowest and 900 the highest. The score is generated by TransUnion CIBIL after taking into account the data in the credit report.

A high score depicts good credit history and responsible repayment behaviour. The closer the digits are to 900, the more likely it is that lending institutions will approve a new loan or credit card. Most lenders generally favour CIBIL scores of 750 and above and are more likely to lend to individuals holding such ratings.

How To Get Free CIBIL Score Online?

As per the Reserve Bank of India's directives, all credit information companies in the country, including TransUnion CIBIL Limited, are required to provide one free credit report on request, once in a calendar year. The credit report will mention the credit score, among other things.

To view your free CIBIL score and report, visit TransUnion CIBIL’s official website and go to the "My Account" tab on the top right side of the screen. Click on "Get your Free Report" link and you will instantly get access to your free score and report. In case you are unable to view the “Get your Free Report” link, it is possible that you may have already applied for a free CIBIL score and report for the year.

How Is CIBIL Score Calculation Done?

Every credit information company has its own mathematical formulae for calculating credit scores. CIBIL TransUnion Score is calculated on the basis of the information found in the "Accounts" and "Enquiry" section of the CIBIL report.

For the purpose of CIBIL score calculation, the credit bureu will take into consideration - repayment history (accounts for 30% of your score), credit mix and duration (accounts for 25% of your score), credit exposure (accounts for 25% of your score) and other factors like recent credit behaviour, credit utilization, etc. (accounts for 20% of your score). The credit bureau will only calculate the score when the credit history is at least six months old.

CIBIL Score Range - What Does Your CIBIL Score Say About You?

A CIBIL score can go anywhere from 300 to 900, with 300 being the lowest and 900 being the best. Here is a breakdown of what the different scores mean:

CIBIL ScoreWhat It Means?
0 or -1CIBIL score of 0 indicates that the applicant’s credit history available is less than six months and hence not sufficient to give a score of 300 to 900. This score is also referred to as “NA”.

CIBIL score of - 1 means that no information is available on the applicant’s credit history. This score is also referred to as “NH”.
300 to 550CIBIL scores within this range are considered very poor. Chances of applications being approved for a new loan or credit card are very unlikely as lenders view such applicants as high risk. Missed and late payments result in low CIBIL scores.
550 to 650CIBIL scores within this range are fairly decent. It shows that such applicants have not performed too bad on repayments. There is still a high possibility that their loan or credit card application will be turned down. If lenders do accept such applicants, they are most likely to be charged high interest rates.
650 to 750CIBIL scores within this range are considered good and there is a much higher possibility that such applications will be accepted. Since the element of risk is still involved, the applicants may not get as many loan benefits as expected.
750 to 900CIBIL scores within this range are considered excellent. It shows that the applicant has ensured timely repayments and does not have any negative mark on their CIBIL report. Individuals holding such scores can enjoy various benefits like quick loan or credit card approval, low interest rates and other favourable terms and conditions.

Why Is It Necessary To Check CIBIL Score?

CIBIL score plays a crucial role in the Indian Financial System, where nearly all lending institutions depend on it for credit approval and disbursal. Some of the areas where your CIBIL score matters greatly are:

  • Approval of Credit - Applications for loans and credit cards depend heavily on your credit score. A score of 750 and above increases your chances of getting easy approvals on credit applications.

  • Rate of Interest - You can benefit from lower rate of interest with a high CIBIL rating.

  • Kinds of Credits - Individuals holding higher credit scores are generally offered a wider range of credit cards from various financial companies and banks. This facility is generally not extended to those holding low credit scores.

CIBIL Score For Loans

CIBIL scores have an important role in the loan approval process. Lending institutions go through your three-digit credit rating before deciding whether to approve or reject your loan application. The relation between CIBIL scores and different forms of credit extended by financial institutions are as under:

  • CIBIL score for personal loan - Financial institutions generally extend personal loans to individuals holding a credit rating of 750 and above. Personal loans carry the most risk for banks since they do not have a collateral, and hence, maintaining an excellent credit score is the most necessary.

  • CIBIL score for home loan - A credit score of 700 and above is considered to be a good number for banks to consider your home loan request. A good score along with fulfilment of all the other necessary criteria can get you a financing of up to 85% of the cost of the property.

  • CIBIL score for car loan – A score of over 600 is generally good for a car loan application, however, a rating of more than 750 is more favourable.

  • CIBIL score for bike loan – Many lenders are willing to extend bike loans to applicants holding a CIBIL score of 650 and above. The higher the score, the more favourable the terms of the loan.

  • CIBIL score for credit card – Since credit cards are unsecured, financial institutions insist on a high credit score. Individuals with scores of 750 and above are highly likely to get their credit card application approved quickly.

Factors That Affect CIBIL Score

Your three-digit CIBIL score is generated after taking into account a number of different factors. The factors that affect your CIBIL score are:

  • Credit history - Repayment history accounts for up to 30% of your score. Defaults or delayed payments can have a negative impact on your CIBIL rating.

  • Credit mix and duration: - These make up for 25% of your CIBIL score. Avoid heavy dependence on unsecured loans, and instead maintain a balance between secured and unsecured credit. A healthy mix of credit will help improve your credit score.

If you have taken loans of longer duration and ensured to make timely repayments, it will have a positive impact on your score.

  • Credit exposure - The total amount of outstanding credit contributes to 25% of your CIBIL rating.

  • Other factors - Remaining factors like recent credit behaviour, credit utilization, etc. will contribute to 20% of your credit score.

Mistakes That Can Affect Your CIBIL Score

Any negligence with regards to your finances can have a major impact on your credit score. Some of the common mistakes that people make which affect their scores negatively are:

  • Relying too much on unsecured credit- Holding too much credit in the unsecured form, like credit cards and personal loans, hurts your CIBIL ratings negatively. It is essential to maintain a healthy credit mix by maintaining a balance between secured and unsecured loans.

  • Delayed credit card payments - Sometimes people tend to completely forget to pay their credit card bills by the due date. An essential point to be noted is that even a single late payment can have a major impact on your credit score. To prevent this from happening, set reminders or add your card to an auto-biller list.

  • Making several loan enquiries - In search of the most suitable loan, customers tend to make several different inquiries with a host of lenders. Such inquiries are referred to as hard inquiries and they can dampen credit scores. To keep this from happening, it is advisable to only apply for those loan products that you feel certain about receiving approval.

  • Holding multiple credit cards - While having several credit cards will help increase your purchasing power, it does not reflect well on your credit score. Additionally, keeping track of them can be a tedious task and strain your income unless they are carefully managed. Rather than obtaining several credit cards, a better choice would be to increase the credit limit on the existing cards. However, make sure not to exhaust the complete limit as this will exhibit a credit-hungry behaviour.

Benefits of Having a Good Credit Score

Maintaining a good score goes a long way in ensuring that you enjoy a smooth financial journey. The many benefits of having a good credit score are as follows:

  • Speedy processing of credit applications
  • Low interest rate credit cards
  • Avail higher limits on credit cards
  • Ability to negotiate interest rates on loans
  • Approval of rented apartments or houses without hassles

How To Improve Your CIBIL Score This Year?

Having a high CIBIL rating is important as it helps banks and other financial institutions decide whether to extend credit to you or not. The closer your credit score is to 900, the possibility of your credit being approved quickly increases. Here are three simple steps you can take to improve your CIBIL rating:

  • Make timely payments - Timely payments of bills are essential if your goal is to maintain a healthy credit score. Avoid making partial or delayed payments or defaulting on payments as this will show you as an undisciplined credit payer and pull down your CIBIL score.

  • Increase credit limit - A credit limit is the total amount that can be borrowed through a credit card. You could request your credit card issuer to increase your credit limit, but make sure you do not exhaust the entire limit. Until your credit rating reaches at least 750, it is recommended that you do not spend more than 50% of your credit card limit.

  • Keep credit inquiries low - Every time you apply for a loan or credit card, the financial institution will make a ‘hard’ inquiry on your CIBIL report. Such inquiries are recorded on your credit report and can bring down your credit score. In addition to this, lenders will view you as a credit-hungry customer.

FAQs on Cibil Score

Does a name change affect CIBIL score?

No, a name change does not impact your credit score in any way. If and when you change your name, make sure to notify your lender about the same, who will then update your personal information and pass it onto the credit bureau. Your records will be modified automatically and your CIBIL rating stays intact.

What is the difference between CIBIL rank and CIBIL score?

CIBIL rank is assigned to companies, while CIBIL score pertains to individuals. CIBIL rank summarizes the Company Credit Report in the form of one digit, ranging from 1 to 10, where 1 is the highest. CIBIL rank is only provided to companies with credit exposure of Rs. 10 lakhs to Rs. 10 crores.

What is credit rating?

A credit rating is an assessment of the credit risk of a prospective debtor. Credit ratings of individuals are measured on the basis of their credit scores, which is a three-digit numeric snapshot of a person’s credit history.

Does skipping payment affect CIBIL score?

Yes, skipping payments can have a huge impact on your credit score. It should be noted that repayment history accounts for up to 30% of your CIBIL score.

What does CIBIL score signify?

A CIBIL score can range from 300 to 900. Here is a breakdown of what different scores mean:

CIBIL ScoreWhat It Means
0 or -1CIBIL score of 0 indicates that the applicant’s credit history available is less than six months and hence not sufficient to give a score of 300 to 900. This score is also referred to as “NA”.
CIBIL score of - 1 means that no information of the applicant’s credit history is available. This score is also referred to as “NH”.
300 to 550CIBIL scores within this range are considered very poor. Chances of applications being approved for a new loan or credit card are very unlikely as lenders view such applicants as high risk.
550 to 650CIBIL scores within this range are fairly decent. It shows that applicants have not performed too bad on repayments.
650 to 750CIBIL scores within this range are considered good and there is a higher possibility that such applications will be accepted
750 to 900CIBIL scores within this range are considered excellent. It shows that the applicant has ensured timely repayments and does not have any negative mark on their CIBIL report.

Does checking CIBIL score frequently affect it?

Hard inquiries, i.e. inquiries made by lenders on receiving loan or credit card applications, have an impact on your credit score. On the other hand, soft inquires (when you check your own CIBIL score) do not impact on your credit score.

What is a good CIBIL score?

Different lenders have their definition of what constitutes a good CIBIL score. It has generally been observed that lenders are most likely to accept applications from individuals holding a credit score of 750 and above.

How to increase CIBIL score from 600 to 750?

To increase your credit rating, make sure to pay your bills on time and in full, maintain the right mix of secured and unsecured loans and keep your credit utilization low.

Will cheque bounce affect CIBIL score?

No, bounced cheques do not impact CIBIL scores, rather a missed EMI or credit card payment will.

How to check CIBIL score for personal loan?

You can check your CIBIL score by visiting the official website of the credit bureau -cibil.com. Choose from the different subscriptions, fill up the empty columns and make the payment to access your CIBIL report and score.

How can I improve CIBIL score instantly?

It generally takes a few months to improve your CIBIL score. To move the digits closer to 900, make sure to pay your bills on time and in full, keep credit utilization low, maintain the right mix of secured and unsecured loans and avoid making too many credit inquiries in a short span of time.

Does having a high CIBIL score give me the benefit of low interest rate?

Applicants with a high credit rating can negotiate low interest rates on their loans and credit cards. If your credit score is above 750, there is a very high possibility that the bank will extend credit to you at a competitive rate of interest.

Does taking an education loan affect my CIBIL score?

Your repayment behaviour of the education loan will have an impact on your CIBIL score. A loan repaid on time and in full will have a positive impact on your score, while a missed or delayed payment will hurt your credit rating.

What to do in case of CIBIL score error?

If you spot an error in the CIBIL report, which results in an incorrect rating, you can initiate a dispute online with the credit bureau. Login to myCIBIL and go to the Credit Reports Section. Navigate to Dispute Center and press on “Dispute an Item”. Fill up the online dispute form and select the section you want to dispute.

Do loan settlements ruin CIBIL score?

When an overdue or defaulted loan is settled with the lender, it is regarded as negative credit behaviour and the borrower’s credit score will fall down by 75-100 points.

What is CIBIL TransUnion Score?

CIBIL TransUnion Score is a three-digit numeric summary of your entire credit history. It ranges from 300 to 900, with 300 being the lowest and 900 the highest. The score is generated by TransUnion CIBIL after taking into account the data in the credit report.

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