What is CIBIL score?

CIBIL score is a three digit number that summaries your credit history. It is also known as credit score. This was first introduced by CIBIL (Credit Information Bureau India Limited). It is India’s first ever credit information company. It collects records of all kind of credit records, which includes lending and borrowing activities involved with loans and credits.

CIBIL score ranges from a scale of 300 – 900.

Applying for a loan with a score above 700 has a better chance of getting approval by the lender.

How do CIBIL gets all these data?

Well, they do not work as an individual entity. Instead, they are collaborated and associated with banks and other credit giving institutions. These partners send out a monthly report to CIBIL based on which it prepares a credit report termed as CIR – Credit Information Report. When required, this report is sent out to those partner institutions in order to evaluate the profile of a loan requestor. On the basis of this CIR, the loan can be decided to be approved or disapproved.

Why is CIBIL score important?

CIBIL score comes into the picture when you want to apply for a loan. Your eligibility for getting the loan granted depends on your CIBIL score too. Once you submit your application, the concerned bank will check your CIBIL score and credit score. If the bank finds your score to be par with their requirement, you shall be granted the loan or else not.

If you had a bad credit history and a not-so impressive CIBIL score, then your loan application can be rejected right away by the bank authority. But, remember that having a good CIBIL score doesn’t ensure a loan. The bank would accept your application and further send it for further approval.

CIBIL doesn’t directly play any part to grant your loan application. Again, different banks has different minimum score requirement to approve loans.  To put it in simple words, better the CIBIL scores, higher is the chance of your application getting accepted.

How does your CIBIL score affect your loan approval?

CIBIL score helps banks to analyse individual’s worthiness to receive the credit. It helps to check if you’ve defaulted on your previous credit actions or duly remained responsible of the obligations.

Having a low credit score, as mentioned earlier, is not the sole criteria which decides the fate of your loan application but it does play the role of a basic 1st level filter.

A better CIBIL score means that you had been responsible and you do have a ‘reputational collateral’ with the lenders. A good score will also help in negotiating terms with the lender for your loan for e.g. On the interest percentage.

How to know your CIBIL score?

CIBIL has made this process to know your score very easy with the help of their online website. You can simply visit their website at https://www.cibil.com/creditscore/ to know your score.

Once you fill up all the details on the online form and submit it, your application will then be forwarded to a payment gateway where you need to pay a fee amount of 470 INR.  Post the payment, your application will be passed to undergo further processes and it shall ask you for some authentication details. Once you furnish those details, your CIBIL score would be emailed to you within a period of 24 hours.

An alternate to this online method is to print out the application and send it out to the CIBIL office with supporting documents like your ID proof, CIBIL transaction details and address proof.

If you don’t have a credit score or didn’t take any credit facility then your score would show up as either ‘NA’ or ‘NH’. This will also come up even if you had no credit transaction within the last two years.

How can you improve your CIBIL scores?

Just being responsible to the credit which you’ve taken and repaying your debt should be enough for you to have a healthy score and a smoother loan approval process. It’s better to practice regular score checks and identify any issues and get it sorted with your lender institution.

Try not to have too many credit cards in your wallet. This might feel good to flaunt but this can have negative impact on your score. Also never max out your credit cards and try using them judiciously when needed.