What do you mean by CIBIL Score?
Your CIBIL Score is a 3-digit numeric summary of your credit history, rating and report and ranges from 300 to 900.
When you are considering a loan or checking the eligibility requirements of various lenders, you may have come across something called your CIBIL credit score. With every article you read and every experienced borrower you meet urging you to check your credit score, knowing what it is and why it is so important in the process of taking a loan is paramount. Here’severything you need to know about your CIBIL score.
CIBIL is India’s first credit information company
Your credit score is often referred to as your CIBIL score because CIBIL stands for the credit bureau's name that creates the score: Credit Information Bureau (India) Limited. In 2000, it partnered with US-based TransUnion. The company is now called TransUnion CIBIL Ltd. CIBIL is the oldestcredit rating agency in Indiaand functions based on a license granted by the RBI. It adheres to the Credit Information Act of 2005 and records the repayment of loans and credit cards by both individuals and companies. If you have ever applied for credit, CIBIL has your information as it is updated by lenders like banks, credit card companies, and NBFCs every month.
Additional Read:How credit score is calculated
CIBIL creates your credit report
Using this information related to your credit activities, the company creates your CIBIL report or Credit Information Report (CIR). Your repayment and borrowing history, ongoing loans, credit card dues, etc., are all compiled by CIBIL and presented in your CIBIL report. It also contains your employment history and loan enquiry information. You can check these details by downloading this report from the CIBIL website. Doing so helps you stay informed about your credit record and enables you to report any errors to CIBIL. Now, you cancheck your CIBIL score for freewith Bajaj Finserv at no extra cost. All you have to do is enter your basic details.
Additional Read:Best place to check your CIBIL score
Your CIBIL Score is derived from the credit report
Besides creating a credit report that details your credit history, CIBIL also gives you a credit score. Even companies have a commercial CIBIL score based on their credit history and credit report. Your CIBIL credit score will keep changing based on your credit report and credit behaviour. For example, your credit score will drop if you miss EMIs or make 5 personal loan inquiries in quick succession. On the other hand, when you pay your EMIs on time, prepay your loan, or pay the total amount due on your credit card on time, yourCIBIL credit score will increase.
Your credit score is essential to evaluating your creditworthiness
Just as lenders provide CIBIL with your credit-related information, they also access the same from CIBIL from time to time. As your CIBIL credit score denotes how good your credit history has been, it is used to judge your credibility when you apply for any form of credit, includinganinstant personal loan.Checking and ensuring that your CIBIL score is high is thus very important.
FAQs
CIBIL creates your credit report
What is CIBIL and its importance? ›
The CIBIL stands for the Credit Information Bureau (India) Limited. It is a three-digit numerical value of an individual's creditworthiness, primarily based on their credit history. It is one of the most important scores to consider when evaluating a borrower's credit application. CIBIL Score ranges between 300 to 900.
What is in a CIBIL report? ›
It displays the name of the lender/s, the type of credit facilities (home loan, auto loan, credit card etc.), the account numbers, whether single or jointly held, when each account was opened, date of the last payment, loan amount, current balance, amount overdue (if any) and most importantly, a month on month record ...
Which CIBIL score is important? ›
A CIBIL score of 750 or above in your credit report is ideal. It will aid in qualifying you for personal loans and credit cards. However, if your CIBIL score is below 685, you will find it harder to borrow funds from banks and NBFCs.
What is the purpose of CIBIL inquiry? ›
Enquiry Purpose refers to the type of credit for which the bank has requested your credit information. For instance: home loan, personal loan, commercial loan and so on.
Who uses CIBIL? ›
The CIBIL, Experian, CRIF High Mark, or Equifax credit scores are all used by Indian banks to gauge the creditworthiness of borrowers. All of them are authorized by the Reserve Bank of India and regulated by the Securities and Exchange Board of India (SEBI).
What are the benefits of maintaining a good CIBIL score? ›
Benefits of a high CIBIL Score
A higher score can lead to significantly lower interest rates, resulting in substantial savings over the loan tenure. Credit card privileges: With a good CIBIL Score, you are more likely to receive higher credit limits on your credit cards.
What are the two types of CIBIL? ›
Consumer CIBIL is used to determine the likelihood of the individual repaying loans on time. Commercial CIBIL, on the other hand, is used to determine whether the business has the capability to repay loans on time.
How is CIBIL checked? ›
A CIBIL check is performed online. We shall look at the step by step guide of how to check CIBIL score a little later. Banks and financial institutions check CIBIL score formerly before granting any loan. The CIBIL check generates a credit score, which is a 3-digit number usually ranging between 300 and 900.
Who does CIBIL belong to? ›
TransUnion CIBIL Limited (formally known as Credit Information Bureau (India) Limited) is a credit information company (CIC) founded in August 2000 which continues to play a critical role in India's financial system post inception of the company.
The CIBIL score works as a first impression for the lender, the higher the score, the better are your chances of the loan being reviewed and approved. The decision to lend is solely dependent on the bank and CIBIL does not in any manner decide if the loan/credit card should be sanctioned or not.
What is the safest CIBIL score? ›
why it is important to maintain a good credit score?
| range | status |
|---|
| 300-579 | poor credit |
| 580-669 | fair credit |
| 670-739 | good credit |
| 740-799 | very good credit |
1 more rowThe minimum CIBIL score for a personal loan is between 720 and 750. Having this score means you are creditworthy, and lenders will approve your personal loan application quickly.
What is CIBIL in simple words? ›
CIBIL stands for Credit Information Bureau India Limited. It is a credit information company engaged in the maintenance of records of all credit-related activities of individuals and organisations.
How does CIBIL collect data? ›
Financial institutions, such Banks/NBFCs submit the consumer's and business's credit data or consumer information to TransUnion CIBIL i.e. details of their past credit behaviour, including account details, outstanding loan amount, repayment history, existing loan/credit card information, enquiries details related to ...
What is the difference between credit report and CIBIL score? ›
So, the only difference between CIBIL and credit score is that credit score can be provided by any of the 4 credit bureaus in India. But only CIBIL provides CIBIL score. A credit score from any of the 4 credit bureaus is equally valid. However, most banks usually prefer CIBIL score.
Why does CIBIL score matter? ›
The CIBIL score works as a first impression for the lender, the higher the score, the better are your chances of the loan being reviewed and approved. The decision to lend is solely dependent on the bank and CIBIL does not in any manner decide if the loan/credit card should be sanctioned or not.
What is CIBIL score in layman terms? ›
CIBIL Score is a three-digit numeric summary of your credit history. The score is derived using the credit history found in the CIBIL Report (also known as CIR i.e Credit Information Report). A CIR is an individual's credit payment history across loan types and credit institutions over a period of time.
What happens if someone has a high CIBIL score? ›
This score varies from 300 to 900. A person having a higher credit score signifies that the person has managed his finances well enough and has a clean record of credit repayments. It also signifies that the applicant has a higher creditworthiness and there is higher probability of him repaying the loan back in time.
What is your credit score and why is it important? ›
A credit score is usually a three-digit number that lenders use to help them decide whether you get a mortgage, a credit card or some other line of credit, and the interest rate you are charged for this credit. The score is a picture of you as a credit risk to the lender at the time of your application.
