Your CIBIL score is the key to realising your dreams like buying a home, a car and higher education for your children. When you have a high CIBIL score, lenders like banks and other non-financial banking institutions are assured of your credit record and will approve of your loans applications with the best interest rates.
Therefore, it is important that you understand how CIBIL works so that you can improve your chances of getting a loan.
There are a lot of important points you need to understand about CIBIL before applying for a loan or a credit card. They are:
What is the history of CIBIL?
To improve transparency in the credit industry, CIBIL was formed in the year 2000 to collect information about loan repayments and credit card payments for individuals as well as businesses. This information is maintained in a database.
CIBIL is ISO 27001:2005 certified, which indicates the highest standards of security. There are two separate divisions in this credit bureau, namely the consumer bureau, as well as the the commercial bureau.
Started in the year 2004, the Consumer Bureau has more than 260 million records, while the commercial bureau started in the year 2006 and has more than 12 million records.
CIBIL has a technical partnership with TransUnion as well as Dun & Bradstreet.
What is a CIBIL score?
Banks have to follow a process very diligently where they need to assess the borrower's creditworthiness. This is done through a credit score. Your credit score depends on your past credit history which includes your loan repayment and credit card payment records. These are assessed by CIBIL to set your score. The CIBIL score, therefore, is an indicator about your creditworthiness.
Banks and other non-financial banking institutions provide information about your credit history to CIBIL.
What is the meaning of a high and low CIBIL score?
There is an inverse relationship between the CIBIL score and risk of default. As a rule of thumb, the higher the CIBIL score, the lower the risk of default and the lower the CIBIL score, the higher is the risk of default.
How can you get your CIBIL score?
To determine your CIBIL score, you need to log onto the website and click on the 'know your score' tab. You will get your personalised credit score. You need to fill out an online form which will ask you for personal information such as your name, date of birth, income, identity proof, address, phone number, as well as the loans taken by you.
You need to pay a fee and authenticate your details regarding your credit history with valid identification proof. Your credit score will then be mailed to you.
What is credit rating?
A credit rating or a credit score is a 3-digit number between 300 and 900 which is an indication of your credit health. It shows your ability to honour financial obligations.
What is the importance of my credit rating?
Apart from applying for a loan or a credit card, your credit rating is important for your potential employers as it is an indication of financial responsibility, especially in financial services.
What is the role of CIBIL in the loan approval process?
CIBIL is a credit bureau which provides lenders with reliable information to take decisions. It has no role in the loan approval process.
Will checking my score have negative repercussions?
There are two kinds of inquiries that are made, one is a soft inquiry and the other is a hard inquiry. A soft inquiry is when you check your CIBIL score (ideally once a year) and a hard inquiry is when the lenders like banks ask for your score. If you simultaneously apply for many loans with a bank, there will be multiple hard inquiries and this will lower your credit score.
Will opting for a credit card decrease my score?
You can close your existing credit card if you have no outstanding dues. This reflects responsible credit behaviour.
What does zilch credit mean?
If you don't have any credit history, you will not have any credit score. This is known as zilch credit.
Are there more than one credit bureaus in the country?
Apart from CIBIL, there are some other credit bureaus in our country. They are Experian Credit Information Co of India Pvt. Ltd., Equifax Credit Information Services Pvt. Ltd. and CRIF High Mark Credit Information Services Pvt. Ltd.
What is the impact of late payments and high credit utilization?
Both late payments on loans and high credit utilisation (regularly spending greater than the upper limit of your credit card) negatively impacts your credit score.
How do personal or unsecured loans impact my score?
The rate of interest in personal loans are much higher compared to home or car loans and have a higher chance of default thereby lowering your score.
Will being 'credit hungry' affect me?
When you are credit hungry and make multiple loan applications, lenders will treat you with caution as there is a high risk of default.
How can my credit score be improved?
There are simple ways to improve your credit score. You need to pay your EMIs on time, settle the full credit card bill, and ensure you have a low credit utilisation. You also need to check your credit history regularly.
How can errors in my CIBIL report be corrected?
Banks are under obligation to allow you to check your credit report. If a loan has been declined, you can request a control number and send a mail to CIBIL.
What is a control number?
CIBIL can track your credit report with a unique 9-digit number known as a control number.
Can CIBIL delete or change my records?
No, CIBIL can only collect records. It cannot change or delete them.
Why is my CIBIL score important in getting my loan sanctioned?
Your CIBIL score forms the basis of your eligibility for loans as far as lenders are concerned. Though the lender has the final say, but in general a higher credit score improves your chances of getting a loan.
How do I check my account number and member name?
To check your account number and name you need to purchase the CIBIL report. Here you will find all details of your credit history.
How do I read my CIBIL report?
It is easy to read your CIBIL report. You need to download the 'Understand you CIR (Credit Information Report)' or watch the online tutorial to help you read your CIBIL report. This will contain your CIBIL score, your personal information, contact information, employment information, account, and inquiry information.
What is credit repair?
Improving your credit health to a level which makes you eligible for loans is known as credit repair.
How do I know I need credit repair?
If you have a credit score below 750, you should consult a professional to help you improve your score and prevent rejections of loans.
What is the cost of credit repair?
If you choose to repair your credit without any help, it is free. However, if there are complex issues involved, it is better to get the help of an expert and pay a fee.
How can I repair my credit on my own?
You can repair your own credit by checking your credit report for any administrative or reporting errors. You need to report the matter to the bureau and file a dispute.
Can I improve my CIBIL score after bankruptcy?
Yes, you can improve your CIBIL score after bankruptcy by taking affordable loans, reviewing your credit report, and getting a credit card secured against a fixed deposit.
Do my investments and assets affect my credit score?
No, they don't.
Is a credit score of 850 good?
A credit score of 850 and above is excellent and is indicative of high creditworthiness.
What is a bad credit score?
When your credit score is lower than 650, it is generally a bad credit score.
How do I improve my credit score after settlement of credit card dues?
After settling your credit card dues, ensure that the status of your credit card changes to 'closed' from settled. You need to make your payments regularly and stay within your credit limits to improve your score in future.
Will education loan lower my score?
Your education loan, like any other loan, needs to be repaid on time. So, ensure that you don't default in payment and your score won't be lowered.
Can I use my PAN to check my CIBIL score?
Yes, you can use your PAN card number along with some personal details as well as questions on your credit history. Once this is authenticated, you will receive your CIBIL score.
Does CIBIL have a defaulter's list?
No, there is no such defaulter's list maintained by CIBIL.
Can I remove my name from CIBIL?
As there is no defaulter's list, there is no question of removing your name from it. Rather, if you improve your credit score by not defaulting on loans and credit card payments, your credit score will improve.
What is the minimum CIBIL score to obtain a credit card?
There is no given minimum score required to get a credit card. If your scores are over 750, there are high chances of your loan request getting.
Can my loan application be rejected even with a high credit score?
Your loan application may be rejected even if you have a high credit score because you might have loans written off in the past, been a guarantor on a defaulted loan, you were erroneously labelled a defaulter, you have a high debt to income ratio, a higher percentage of unsecured loans in your loan profile or maybe living in an area where the postal code has been blacklisted.
Can my credit score be affected even if I miss one payment?
Yes, it is important that you don't default on a single payment to keep your credit score high.
How will delayed payments affect my credit score?
Yes, delayed payments will adversely affect your credit score.
How long does it take to improve the credit score?
It is advisable to go to the CIBIL website and check your score before applying for a loan. Depending on your current credit history, it could take between four months to a year to improve your credit score.
What consequences will I face if I applied for a loan with a low credit score?
If you apply for a loan with a low credit score, there are chances that your application will be rejected outright. Your processing time will be longer, there will be more paperwork, and you will have to pay higher rates of interest.
How does length of credit history affect my score?
If you have a long credit history, there is a substantial information available on your credit report. This is very reassuring for banks as they can establish a trend in your repayment status. A good long term credit history is preferred over an excellent short term one.
Does my savings account balance affect my credit score?
No, there is no relationship between your savings account balance and your credit score. It depends on your credit history with regard to loan repayments.
Can errors in my report be corrected by CIBIL?
If rectification of errors has been approved by banks, then CIBIL can correct them.
Can my loan be rejected due to my employer's credit profile?
Unfortunately, yes. If your employer has defaulted in repayment of loans, the chances of your loan being approved is lower. The reason is that such credit history indicates a poor financial condition for your employer and they could default in paying your salary.
What is the difference between CIBIL score and credit report?
The credit report is a comprehensive document which contains your personal information, repayment history of loans and credit card payments, as well as your CIBIL score. So, the CIBIL score is part of the credit report.
Can I get a free credit check or credit report?
Yes, you can get a free credit report once a year from credit bureau's like CIBIL
What is considered an average credit score?
There is no standard average credit score. You can have either a good or a bad score and you should try to maintain a good score.
Who can access the credit report?
Members of CIBIL who have provided data on loans can access the credit report.
What are the data security measures taken by CIBIL?
CIBIL is ISO 27001 certified indicating highest standards of data security.
What information is not available on the credit report?
Information like income, investments, and bank deposits can't be found in a credit report.
Is the Right to Information act 2005 applicable to CIBIL?
No, the Right to Information act 2005 is not applicable to CIBIL.
Loans are indispensable today. People take loans to improve their lifestyle, pay for their dream home, car, and their children's education.
With the right CIBIL score, a window of opportunities open for you with higher loans at preferential rates. Therefore, it makes sense to live your dreams with a greater knowledge of CIBIL.
