CIBIL Score

What is CIBIL Score?

CIBIL stands for Credit Information Bureau India Limited. It is India's leading credit information company that keeps records of credit history for individuals and businesses. These records are sourced from banks and other financial institutions, and these records are used to generate a credit report and a credit score.

The CIBIL score is an equivalent of three-digit range, which runs from 300 to 900. High CIBIL scores reflect good creditworthiness. This score helps lenders to determine how likely borrowers are to make their loans or credit card dues punctually.

How to check your CIBIL score?

1. Visit the official CIBIL website (https://www.cibil.com).
2. Register by providing your personal details, such as name, date of birth, and PAN card number.
3. Verify your identity using OTP-based authentication or other methods.
4. After the process is over, you can view your CIBIL score and credit report, usually free one time per year.

Importance of CIBIL score

• Loan Approvals: Lenders use your score to decide whether to grant your loan or credit card.
• Interest Rates: With a higher score, you may get better interest rates.
• Creditworthiness: It indicates how you manage repayment and, in general, how disciplined you are in finances.
• Future Financial Goals: Good score ensures smooth credit accessibility when required.

What is a good CIBIL score?

CIBIL scores range from 300 to 900, with the following parameters set for it:

• 750 and above: Excellent; better probabilities of loan approval along with favorable terms
• 650-749: Good; Loans may be obtained, though not always at the best rates
• 550-649: Average; loan might be difficult to obtain along with higher interest rates
• Less than 550: Bad; it shows that there's a high risk of a default.

How to improve CIBIL score?

1. On-Time Payments: Pay your loan EMIs and credit card bills before they get due.
2. Credit Utilization Ratio: Use not more than 30 percent of the credit card limit
3. No frequent applications: This too many applications create hunger for credit, and also this reduces your score.
4. Credit report monitoring: One should look out for all errors in the report and dispute them.
5. Pay arrears: Pay debts to enhance your credit-worthiness.
6. Diversified Credit: A good mix between secured (home loans) and unsecured credit like credit cards would give one an impression of being responsible enough with finances.