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Credit Information Bureau India Ltd or CIBIL™ is India’s first credit information bureau. CIBIL™ is one of the four major credit bureaus in India. Transunion CIBIL™ was the first credit rating agency to establish themselves in the early 2000s, followed by other agencies like Equifax, High Mark and Experian.

The primary role of CIBIL™ is to compile and keep records of loan and credit card payments made by individuals and businesses. It is a database containing the credit histories of commercial and individual customer borrowers. These records are sent to the credit bureau on a monthly basis by banks and other lenders; using this information, a CIBIL™ Score and Report for individuals is generated, enabling lenders to assess and authorize loan applications.

What is the CIBIL™ score?

Your CIBIL™ score is a three-digit numeric summary of your credit history that is calculated using information from the 'Accounts' and 'Enquiries' sections of your CIBIL™ report, such as your loan accounts or credit cards and their payment status, as well as outstanding amounts' days past due. Based on your borrowing and repayment history as shared by lenders, the score reflects your creditworthiness. Your CIBIL™ score ranges from 300 to 900, and the higher your score, the more likely you are to be accepted for a loan.

What is the importance of the CIBIL™ score?

Individuals are becoming increasingly reliant on credit. The current economy has made credit both necessary and appealing to borrowers. There is also social pressure for owning a home or driving a luxury vehicle, which forces people to obtain credit in order to satisfy these desires.

Though banks and NBFCs offer a variety of loan products, there are strict eligibility requirements for these loans. Your credit score is a vital factor in evaluating your credit eligibility.

That is why CIBIL™ plays an important role in the credit market enabling borrowers and creditors alike in accessing the much-required credit for themselves.

Additional Reading: What Is The Importance Of A CIBIL™ Report

Why is my CIBIL™ score important for obtaining loans and credit cards?

During the loan application process, the CIBIL™ Score is extremely important. After an applicant completes the application form and submits it to the lender, the lender first reviews the applicant's CIBIL™ Score and Report. If the CIBIL™ Score is poor, the lender can reject the application without even considering it further. If the CIBIL™ Score is high, the lender may investigate the application and consider other factors to decide if the applicant is creditworthy. The CIBIL™ Score acts as the lender's first impression; the higher the score, the better the chances of the loan being checked and accepted.

What are the factors that affect your CIBIL™ score?

Since your CIBIL™ score is a very important factor in your loan application process, you have to understand the factors affecting your credit score.

The primary factors affecting your credit score are: 

  • Payment History - A flawless payment history demonstrates that you are a responsible creditor. Since the lender knows you're a creditworthy borrower, he will give you the best loan terms and interest rates possible. As a result, make sure you never miss a bill.
  • Credit Utilization Ratio - Credit utilization ratio is the amount of credit you use in relation to your total credit cap. To maintain a good credit score, experts suggest that you keep your credit utilization at 30%. A credit utilization rate of more than 50% is unfavourable to lenders. Lenders face a higher default risk because they have high credit exposure.
  • Credit Mix - One of the most common variables used to calculate credit scores is credit mix or the diversity of your credit accounts. Having multiple credit accounts, such as a home loan, personal loan, and credit card demonstrate to lenders that you are capable of managing multiple types of debt at the same time. It also assists them in gaining a better understanding of their financial condition and ability to repay debt.
  • Multiple enquiries on your credit - If your credit report contains a high number of hard inquiries in the last few months, it will have a negative impact on your credit score. Multiple hard inquiries suggest that you are desperate for credit, making you a poor risk. When you increase your credit, it will mean an increase in your credit load, and as a result, your credit score will decline.
  • Length of your credit history - Recent borrowers may also acquire a credit score. However, in order to create a healthy credit score, you must have credit for a period of time. Your credit score is determined by your oldest credit account. When you have a long credit history, creditors are convinced that you are good at debt management, which improves your credit score.

Additional Reading: What are the factors that affect your CIBIL™ score

What is the information contained in my CIBIL™ report?

The CIBIL™ Report is a detailed record of your credit payment history based on data provided by banks and financial institutions to assist loan providers in making informed lending decisions.

The following are included in the report:

  • Your CIBIL™ Score
  • Contact and personal information
  • Your occupation and income are covered in your employment information.
  • Account information includes loan and credit card account specifics such as loan amount, current balance, and any past-due amounts.
  • Request details from all lenders with those you have applied for credit.

How to check my CIBIL™ score for free?

Individuals are entitled to one free credit report, as well as their credit score, from one of the credit bureaus, according to RBI guidelines. CreditMantri, on the other hand, provides a free credit score as well as a comprehensive credit review report to assist you in making educated decisions and discovering credit products that are ideally tailored to your needs.

Your CIBIL™ score can be obtained directly from the CIBIL™ website or via CreditMantri. The procedure is extremely simple;

You just have to enter your mobile number, PAN number, and a few other information such as your name and email address. CIBIL™ will then generate your credit score as well as a thorough credit report for your analysis.

Everyone Must Know About CIBIL™ and Credit Score FAQs

1. How many times can I check my CIBIL™ score?

There is no limit on how many times you can review your CIBIL™ ranking. However, bear in mind that the CIBIL™ score is only available for free once. You must pay for a consecutive credit report.

2. What CIBIL™ score is regarded as the best?

There is no such thing as a "best CIBIL™ ranking." A credit score of 750 or higher, on the other hand, is deemed acceptable and will get you the best loan and credit card deals.

3. What is the minimum CIBIL™ score required to get a loan?

The minimum CIBIL™ score considered for a loan is between 720 and 750. While it may be possible to get loans with a lower credit score, the interest rates on these loans are steep and also they come with unfavourable terms.

4. Is CIBIL™ score affected by loan rejection?

If a bank or NBFC refuses your loan, it may be because of your low CIBIL™ ranking. With the rejection, the CIBIL™ score will fall even further. And the rejection decreases the chances of borrowing even further. The low CIBIL™ may be attributed to debt non-payment, debt settlement, high credit usage, and so on.

5. How often is the CIBIL™ score updated?

Credit institutions send data to CIBIL™ every 30-45 days, but if you order your CIBIL™ Score and Report within 45 days of closing or paying off your accounts, your details will not be updated in CIBIL™'s records.

6. How can I remove an incorrect entry from my CIBIL™ report?

If you find an incorrect entry on your CIBIL™ report you can report it to CIBIL™ to get it rectified. If CIBIL™ finds that the entry is incorrect, they will remove it and update the report.

7. How many years will CIBIL™ keep a record of my defaults?

Bad debts remain on your credit report for 7 years.

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