Meaning of CIBIL score

Meaning of CIBIL score

CIBIL uses complex statistical analysis on this information and converts it into a 3 digit number, called a Credit Score. This CIBIL Score ranges from 300-900 and reflects your credit behaviour. It gives potential lenders a snapshot of your credit-worthiness.

Meaning of CIBIL score

What does a CIBIL Score mean?

Credit Information Bureau (India) Limited, known as CIBIL, is a credit rating agency that maintains credit-related records of both individuals and corporates. Member banks and other financial institutions provide data to CIBIL on a periodic (usually monthly) basis on all the credit related activity of their customers including any late or missed payments, loans approved, credit limit, written off or settled accounts and so on.

 CIBIL uses complex statistical analysis on this information and converts it into a 3 digit number, called a Credit Score. This CIBIL Score ranges from 300-900 and reflects your credit behaviour. It gives potential lenders a snapshot of your credit-worthiness.

If you have a credit score of 750 and above, then you are considered to be a credit worthy customer and you stand a good chance of being approved for a loan or credit card. If you have a credit score of less than 750, you might still qualify for a loan, but you might not be able to enjoy all the advantages that a customer gets with a score of 750 and above.

What are the factors that affect CIBIL Score?

  • Delay in payments: If you have made any delay in payments, or skipped any payments in the past, this will create a negative effect on your CIBIL score. Every single late or incomplete or missed payment is reported by your lender to CIBIL. Each delayed payment contributes to a decrease in your credit score.
  • Multiple loan or credit card applications: If you apply for multiple loans or credit cards within a short timeframe, it gives the impression that you are ‘hungry’ for credit and need to obtain credit from multiple sources. A large number of applications without corresponding approvals will lead to a decline in your credit score.
  • Exceeding your credit limit: Your credit card company provides you with a credit limit based on your income. If you over utilise your credit limit by using more than 50% of your limit, it will affect your score negatively. For example, if your credit limit is Rs. 1 lakh and you consistently spend Rs 80,000 on your monthly bill, it will have a negative impact on your score.

How can I maintain a good CIBIL score?

Before you apply for a loan, you need to check a few aspects which banks check, when you apply for a loan.

  • Obtain your credit report: Check your latest credit score and credit history and take steps to improve your score immediately, if required.
  • Pay all your debt obligations in full and on time: This is the most important thing you can do to maintain a good score. Even if the amounts are small, the positive impact on your credit score is substantial.
  • Use your credit limit wisely: When banks provide you with a particular credit limit, make sure that you don’t exceed 50% of the credit limit provided to you. This might cause a negative effect on your CIBIL score.
  • Keep checking your credit score periodically: Even if you think you have a good CIBIL score, some other factors might bring down your score. Also, being updated on your report can help you identify and administrative errors or fraud that might unnecessarily be dragging down your score.
  • Do not make multiple loan or card applications in a short timeframe: Research the various offers and only apply for the one that you think you stand the best chance of being approved for. Each loan or card rejection can lead to a further decrease in your credit score.

While there is no fixed minimum CIBIL score to apply for a loan or credit card, it is recommended that you ensure that you have a score of at least 750 before you apply. If you a low score, there is a high chance that your application will be rejected, and each rejection causes your credit score to drop even further.

If you need help with improving your score or choosing the right credit offering best suited to you, a professional credit management company like CreditMantri can help you increase your score and become loan-eligible. It is important to take steps right away to improve your score so that you avoid the possibility of loan-rejection, and enjoy life-long, fast and hassle-free access to credit in the future as well.

Comments (1)

Ravishanker


Commented on 11, February , 2016

thank you for giving valuable information.

Check your Free Credit Score Online

As part of our efforts to make the end consumer services affordable and available at price points which are favourable to the customer, CreditMantri may receive fees / commissions from lenders.

CreditMantri ™ is a registered trademark of CreditMantri Finserve Private Limited. All Rights Reserved. Product name, logo, brands, and other trademarks featured or referred to within Credit Mantri are the property of their respective trademark holders.

CreditMantri was created to help you take charge of your credit health and help you make better borrowing decisions. We support customers with every kind of credit profile - those who are new to credit and have a minimal or nonexistent record; those who have a problematic history; and those who already enjoy a healthy profile. If you are looking for credit, we will make sure you find it, and ensure that it is the best possible match for you. How do we help you? We enable you to obtain your credit score instantly, in real time. We get your Credit Score online and provide a free Credit Health Analysis of your CIBIL or Equifax report. Based on the analysis, we help you discover loans and credit cards best suited for your credit profile. We help you understand your Credit Information Report (CIR) and offer practical and personalized recommendations, tailored to help you improve your score and become loan-eligible. We are a one-stop shop for all your credit needs. We make it easy for you to browse through and compare the various financial products on offer on the market; access our free and user-friendly online tools; and finally, enjoy a stress-free application process with quick approvals. We ensure that you have a high probability of being approved for the loan or credit card you apply for as we only suggest products pre-matched to your profile. We help you avoid loan rejection by carefully determining your eligibility and matching you with the right lender/product. We achieve this with a cutting edge combination of data science, technology and credit management that ensures that both lenders and borrowers have a transparent common platform to make their decisions. We treat your data with the utmost confidentiality and will never share or sell it to anyone. That is our CreditMantri guarantee. Our dedicated and best-in-class customer service will go the extra mile (or two) to support you on every step of your credit journey. Our 4,20,000 happy customers are our best testimonial.

CreditMantri is India’s No. 1 site for Credit Analysis and Free Credit Score Online. Let us help you take control of your credit goals and unlock the door to your financial freedom.