Learn what is Cibil Report and How to read it - IndiaLends

What is CIBIL Credit Report

TransUnion CIBIL is the oldest credit bureau in India. It helps financial institutions like banks, and others to manage their business. Moreover, there are three divisions, commercial bureau, consumer bureau, and MFI bureau.

Parameter

CIBIL

Year of establishment

2000

Scoring system

300-900 where 900 is the perfect credit score

About CIBIL Score

CIBIL was the earliest to establish a credit bureau in India. This also makes CIBIL score as one of the most reliable sources to assess the creditworthiness of any customer. The CIBIL score ranges between 300 to 900 where 300 is the poorest score and 900 is considered the perfect credit score.

The CIBIL score is calculated on the basis of the information provided by lenders and financial institutions. It is refreshed every month and can vary depending on your credit activities. This score helps the lender to know if a customer is creditworthy or not.

CIBIL Score Range

As mentioned above, the CIBIL score has a range between 300 to 900 where 300 is a poor credit score and 900 is the perfect credit score. Here are the different ranges of a CIBIL score:

Range Type

Score Range

Excellent

750 & Above

Good

700 – 749

Average

650 – 699

Poor

550 – 649

Bad

Below 550

Excellent(750 and above):

This is considered an excellent credit score. Having an excellent credit score means you have a great financial record and have been managing your finances well. A credit score above 750 can easily get you low-interest rates on loans and easy approval on credit cards and other forms of credit.

Good(700-749):

A good credit score can also give you access to personal loans and other forms of credit. However, you might not be given the best interest rates as compared to someone with an excellent credit score.

Average(650-699):

This is an average score and as the literal meaning says, it is neither bad or good credit score. With a score in the range between 650-699, there is a possibility in getting approval from some of the banking institutions and rejection from others.

Poor(550-649):

The credit score that ranges between 550-649 is considered a poor credit score and is not considered credible. Only if you can provide collateral will your chances of getting credit approvals to be possible.

Bad(Below 550):

Having a bad credit score will not get you personal loan approvals or for any other forms of credit. A credit score below 550 is considered too risky for any financial institution to lend you money.

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How to Check CIBIL Score

ransUnion CIBIL offers one credit report for free every year. In order to get access to that, you can follow the steps given below:

Step-1: Visit the official website of CIBIL.

Step-2: Fill in all the basic details such as name, address, contact number, and PAN details.

Step-3: You would be required to answer a few questions relating to some credit products.

Step-4: After you submit the application, you will be provided with the credit report.

However, checking your credit report regularly is important if you want to manage your finances well. This is where IndiaLends can help you. You can check your credit report for free at IndiaLends. Moreover, you are given personalized insights on your score that can help you improve or maintain your credit score.

Factors that affect your CIBIL Score

Here are a few factors that affect your CIBIL score:

  • Late payments

    This is a no-brainer. Since your credit score is a numeric expression of your creditworthiness, not making payments on time will affect your score adversely. Moreover, your payment history weighs 35 percent of your credit score. A single default in payment can drop your credit score by 30 points.

  • Bankruptcy

    Another factor that affects your CIBIL score if you willfully default your loan or are unable to repay the loans in full. A piece of negative information such as settlement or bankruptcy will stay in your credit report for 7 years and will affect your score as long as it stays on your report. Therefore, it is best to fully repay your payments if possible or discuss your financial situation with the respective lender.

  • The closing of old accounts

    The closing of old accounts is another major factor that affects your CIBIL score. The length of your credit accounts comprises 15% of your credit score. Therefore, it is best to not close your old accounts unless it is necessary.

  • Maxing of your credit limit

    The credit utilization ratio is another crucial aspect of your credit score. It is calculated by dividing your existing debt by the total credit limit available to you. Ideally, it is best to have a ratio of 40% or below.

Checking your credit score is important as it is a vital step towards your financial well-being. IndiaLends offers you free credit report worth ₹1200.