What Is CIBIL? What Is A CIBIL Score? What Is Its Significance?

Posted by amrina alshaikh on December 9th, 2020

Expanded as Credit Information Bureau (India) Limited, CIBIL is the country’s leading company providing authentic credit information. A CIBIL score is a credit rating computed by this organization. Many websites offer complimentary CIBIL score check free service. But retrieving a CIBIL credit report is not free as it is a paid service.

What is a CIBIL score?

It is a three-digit number that summarizes a person’s credit rating. A credit rating under 700 is considered average and not accepted by a large number of tier 1 banks to grant loans. A CIBIL score under 600 is considered bad, and is not acceptable by almost every financial institution or private lending company.

Where to find the CIBIL score in the CIBIL report?

The CIBIL report has the Accounts section and the Enquiries section. Both these sections indicate the CIBIL score. There is also an indication of current loan accounts, past loan accounts, credit card statuses, payment statuses, outstanding loan amounts and due dates missed. Simple studying the CIBIL report is enough to understand one’s personal financial standing.

Where can I get a CIBIL report?

If there are sites that are offering CIBIL score free check, considering using them. These sites may or may not provide the full copy of your credit report. To get a full copy, visit the CIBIL site, pay the amount and get a PDF version of your CIBIL credit rating report delivered to your email ID. You can also have the report posted to a physical mail address.

What are the factors that are taken into consideration to compute a credit rating by CIBIL?

A scoring algorithm is used. A number of data points are used for this purpose. Macro-level credit and money trends are also factored in. A person’s three years past credit history is used as a reference. Based on this data, a person’s payment history is scrutinized. The person’s mix of secured versus unsecured loans is taken into consideration. Inquiries made by loan providers also have a bearing on the credit rating. Lastly, credit utilization is considered, as well.

Some other factors that could impact your credit score but is not given as much as weightage  by the scoring algorithm are:

• Duration of your credit history
• Depth of credit
• Duration of your outstanding balances
• Credit card transaction behavior and repayment pattern
• Actual repayment to total amount due ratio
• Number of new credit card accounts opened or closed

How can the CIBIL score be improved?

• When using interest-free credit from apps such as LazyApp, ensure to repay the amount within 15 days. This practice applies to loans taken from all lenders. Control your utilization. Use shop now pay later schemes instead of using high credit from credit cards.
• Maintain a healthy mix of secured versus unsecured loans. More of the latter may have a negative impact on your CIBIL score.
• Review your credit history every three months. Subscribe to CIBIL to regularly receive reports, updates, tips, and associated financial information.