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A CIBIL™ credit score is a three digit number that gives a snapshot of a person’s credit health to potential lenders such as banks/NBFCs or credit card companies. In India, the RBI authorises three credit rating agencies, or credit bureaus, to issue credit reports and credit scores. These bureaus are CIBIL™ [Credit Information Bureau (India) Limited] , Equifax and Experian. While all three credit scores are valid, the CIBIL™ Transunion score is the most widely used. Transunion is an American company that has partnered with CIBIL™ in India.

CIBIL™ collects and maintains records all your credit-related activity with banks, credit card companies and other formal lenders. The bureaus get reports on a periodic (usually monthly) basis from these lenders on all your credit transactions. This includes information on your EMI and credit card payments (including any late or missed payments), balance outstanding, any change to your total credit limit, and all other details that are relevant to building your credit profile, your current and past loans and details of all loan and credit card application you have made, and whether they were approved or rejected.

Based on all this data, a complex mathematical formula is used to calculate your credit score. The score is a reflection of your past and current credit behaviour and gives potential lenders a snapshot of how responsible you are in fulfilling your debt obligations. If you have a good track record of making all your payments in time and in full, your score will tend to be high. If you have a history of defaulting on payments or using excessive credit, it will have a negative impact on your credit score .

What credit score do I need to get a loan?

There is no magic minimum number at which you are guaranteed a loan. Every bank/NBFC has a different set of lending criteria to judge whether to approve a loan or not. In general, lenders look for a credit score of 750 when deciding whether to go ahead with processing a loan application. However, some lenders might look at other factors as well, so it might be possible, though not easy, to get a loan with a credit score of less than 750.

How does CIBIL™ Transunion score impact individuals?

A CIBIL™ credit score denotes an individual’s credit-worthiness to potential lenders. If an individual has a low credit score, lenders see it as a warning signal. A low score signifies that the customer has not demonstrated responsible financial behaviour in the past. It is difficult to get a loan with a low score, and even if a lender approves you for a loan, it might come with stricter terms and conditions like a higher interest rate or smaller loan amount.

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