CIBIL Credit Score | Thasneem Banu

Introduction:

• Expanded form: TransUnion CIBIL - Formerly known as Credit Information Bureau (India)Limited

• It was founded in the year 2000 and currently manages the credit histories of over 600 million Indians and 32 million corporate entities.
• CIBIL is India’s first and most popular of the 4 credit information companies licensed by The Reserve Bank of India.
• There are 3 other companies also licensed by the RBI to function as credit information companies. They are Experian, Equifax, and Highmark.
• However, the most popular credit score in India is the CIBIL score.

 

Now, let's understand the main concept.

 

What exactly is a CIBIL score?

• 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).
• Your CIBIL Score is one of the most important parameters considered by lenders before approving your loan application.
• CIBIL Score also provides lenders with necessary insights into your credit history through past patterns of credit usage and loan repayment behavior.
• It acts as a guiding principle for lenders, making the loan approval process faster.

Have you wondered if all your friends/ family members are going to apply for a loan and they’ll be asked something called Credit Information Report?

If your answer is YES then now is the time to get clarity on the same.

 

What is CIR (Credit Information Report)?

• A CIR is an individual’s credit payment history across loan types and credit institutions over a period of time.
• Your CIBIL Report is a record of your credit payment history compiled from information received from banks and financial institutions.
• The purpose is to help loan providers make informed lending decisions basis your credit history, quickly and objectively. A healthy credit report can get your loan approved faster and often, at better terms.

What is considered as a Good CIBIL score?

The value of the Credit Score ranges from 300 to 900.

• Excellent CIBIL score: 750-900
• Good CIBIL score: 650-750
• Average CIBIL score: 550-650
• Poor CIBIL score: 300-500

What is NA/NH?

• If you have no credit history, your CIBIL score will be NA/NH which means it is either “not applicable” or “no history”.
• If you have not used a credit card or have never taken a loan, you will have no credit history.

What do banks check on a General Level?

• CIBIL Report and Score
• Work situation
• Account Information
• Payment Tracking
• The EMI-to-Income Ratio

How to improve your CIBIL score?

• Paying your Loan EMIs and Credit card bills on time by due date is the most important for maintaining a Good Credit History and High CIBIL Score.
• It is better to have a Healthy Mix of Secured (such as Home Loans, Auto Loans) and Unsecured Loans (such as Personal Loans, Credit Cards)
• Review your Credit History frequently throughout the year.
• Don’t have unused Credit Cards
• It is advised by Financial Experts that; an individual should attempt to keep their Credit Usage Ratio between 25 and 30 percent to maintain a solid CIBIL score.

 Do you know there’s another interesting concept called “CIBIL Rank”?

• CIBIL Rank is the record of your company’s credit history. ranges from 1 to10, with 1 being Excellent and summarizes Company Credit Report (CCR)
• Hence, the closer the company’s rank to 1, higher are their chances to get loan sanctions from Institutional Lenders.
• CIBIL rank is available for companies with current credit exposure up to Rs.50 crores

I hope this blog serves the intended purpose of Readers knowing about CIBIL.

Thanks a lot for Reading!

References:

1. https://www.livemint.com
2. https://www.hdfcbank.com
3. https://www.cibil.com
4. https://cleartax.in
5. https://www.bajajfinservmarkets.in
6. https://www.bankbazaar.com