Cibil Credit Score

Cibil Credit Score

Credit Information Bureau (India) Ltd, and is one of the most authentic agencies that tell customers about the maintaining the healthy credit score. Agency collects information of transaction record, loan history and other records to help them to get their exact CIBIL score. Agency collects the records and represents them in form of CIBI credit score and sometimes it is known as credit information report (CIR).

Major credit agencies and bureaus like Dun, Bradstreet and TransUnion International since it came into existence in 2000 and making credit score calculation easy.

What is Credit Score?

Credit score is a set of three numerical digits that reflect to bank credit history of the customer. This score specify the value of entire transaction that you have made through that account. User will also get information about any transaction related mistakes happened in the past and tip to increase the creditworthiness. CIBIL will display all your transaction records and other useful details.

Credit Information Bureau or CIBIL calculates the score on scale of 300-900, where 300 is lowest credit score and 900 is best credit score that depends on individual records. To calculate the score in free, agency put last 6 month transaction record of individual and put that record in 258 different variables with specific feature then processes it for final calculation.

Other renowned agency that calculate the score in free are Equifax, Crif Highmark and Experian. Calculation of CIBIL score is based on following facts:

  • Loans as proportion of income.

  • Record of complete transactions.

  • Loan equities.

  • Previous score, credit score and loan record.

  • Credit card and unsecured vs. secured loan.

Range of Credit Report

Credit Information Bureau (India) Ltd calculates the credit score on the criteria of 300-900. In this range there are several score that will appear on the report as per individual bank creditworthiness. Some of them are:

  • 0-1: This credit score represent that your credit history is almost null and you have not earned the credits.

  • 350-550: This score specifies that you will not be able to apply for new credit card or loan because this score card reflect your poor credit history and repayment record.

  • 550-650: This score card represent that your score is fair and bank can trust you for new credit card or loan.

  • 650-750: If your credit score belong to this criterion then there will be no issue in approval of new credit card and loan.

  • 750-900: This is regarded as an excellent score and if your credit score belongs to this range then you can apply for new credit card and loan quite easily.

Why Credit Information Report is Important?

  • It helps in cultivating financial discipline.

  • It helps in analyzing your true financial standing and make plans for future finances.

  • You can be on top of your borrowings and avoid debt traps.

  • With a CIBIL score in hand, you are in a great position to make decisions regarding availing new forms of credit.

Positive Factors of Credit Report

  • It helps in avoiding over leveraging.

  • Approved limit can be properly used.

  • On time loan EMI payment by the customer.

  • Requesting and maintaining a copy personally rather than through financial institutions.

  • Regular bill payment of credit card.

  • Maintaining strong financial record.

  • Ensuring banks and other financial institutions you are dealing with record and submit positive information to CIBIL.

Facts that Affects Credit Report Negatively

  • Multiple applications for unsecured loan getting rejected.

  • Too many credit report enquiry by banks and other institutions.

  • Too much unsecured credit such as multiple personal loans.

  • Irregular loan repayments.

  • Cheque bounce/dishonor.

  • Errors in record by banks and other finance institutions.

  • Defaulting as a guarantor

Benefits of High CIBIL Score

  • Easy processing of credit card and loan.

  • User may get concession in processing fees and other charges, although it is not mandatory.

  • If CIBIL score is more than 700 then your credit card request must be approved quite easily.

  • Negotiation in interest rate possible with higher interest rate.

Steps to Check Credit Report Online

  • Go to official portal of CIBIL and click on KNOW YOUR CIBIL SCORE.

  • Fill all the mandatory details in form and go for next step.

  • You will be redirected in payment gateway page, here you can select payment mode as per your interest and pay the fee decided by the CIBIL.

  • You will land on user verification section, where they need to answer few account security related question for further processing. Minimum three answers must be correct and then CIBIL will forward your report in your email within 24 hour of security related validation.

  • If due to any reason you fail in online authentication then do not worry, send your information in offline mode along with required documents and get your CIBIL score.

Difference between CIBIL Score and CIBIL Report

Document that provides complete information about your entire credit, transaction history along with repayment details is known as CIBIL or Credit Information Report (CIR). In current time, it is quite important to know your credit score before applying for loan or credit card.

CIBIL score is just part of that report that reflects to your creditworthiness till that date whereas your report will consist of overall transaction record of account. In simple words it can be said that CIBIL report is your mark sheet and CIBIL score is percentage that you have earned. Always maintain healthy score card and your score must be more than 750 to avoid any bank related issues.

Factors that Play Vital Role in Calculation of CIBIL Score

  • Loan Value: High loan balance reduces your score. Low loan amount refers to healthy credit usage and higher credit score. Many loans enquire to avail loans indicative belongs to culture hunger that may impact your score negatively.

  • Track Record of Past Payment: Delayed recent payment refers to negative score card. Continuous payment lends towards higher score. Delayed payment leads towards lower credit score.

  • Unsecured vs. Secured Loan: Higher loan amount causes lower score. High credit card balance causes lower score.

  • Default, Write-off and Previous Settlement: Multiple write off leads to lower score. Latest write off leads to negatively than other factors. Delayed or defaults on loan payment offers negative impacts in comparison of unsecured loan. Write offs documented by lenders on previous debits leads to low chances of getting a loan.

Tips to Get a Great Credit Score

Seek Variety:

A combination of unsecured and secured debt will help you to boost your CIBIL score freely. As we know that car loan is secured debit and a credit card is an unsecured loan, so by taking both and maintaining both of them well by paying on time will give you a higher CIBIL score.

Be Disciplined:

Loan and credit card have solid impact on growth of credit score. If someone is paying all dues on time then it will be beneficial in credit or CIBIL score boost up.

Be Frugal:

To get higher score always keep your credit utilization ratio at 30%. If due to any reason, you are facing difficulty in credit utilization then look for higher credit limit offering credit card.