How to check CIBIL Score & improve it?
What is CIBIL Score?
- A CIBIL Score, also known as credit score is a three-digit number between 300 to 900 that represents the credit history of an individual.
- By credit history, it refers to how good that person has been in repaying his loans.
- Based on the credit history, the credit score of an individual is deduced.
- The closer the score to the 900, the better it reflects upon the credit history.
- Lower it is towards the 300, worse it reflects upon the credit history and pulls down the chances of getting loans.
Why CIBIL Score is important?
- A mere three-digit number decides whether or not you can get a loan if you ever need financial assistance - is your CIBIL score.
- What is CIBIL score all about?
- Why is it important for us to know about it? How does it facilitate the smooth approval of loans? Let’s understand.
- We reach out to our credit cards and loans for several reasons.
- They prove to be saviours at the time of the financial crisis and also help us to achieve our dreams and aspirations.
- Most of us who receive calls from the credit card or loan departments of banks and other financial institutions offering-
- Life-time free credit cards
- Enquiring whether we need a personal loan
- Seldom do we realise that these free offers for financial aid are not all that easy to get at times.
CIBIL Score Meaning
- During the time of taking a home or a business loan, the procedures and interactions that you need to go through, the endless paperwork, and have repeated bank visits to get the loan approved.
- The first thing it requires is to have a perfect CIBIL score.
- A CIBIL Score check is a mandatory procedure followed by every loan provider.
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What is considered a good CIBIL Score?
- The CIBIL Score range that falls within between 300 to 900 is divided into three slabs as mentioned below:
- The first slab is between 300-600 which is considered to be at credit risk.
- Borrowers falling within this slab are not likely to get their credit cards or loans approved by banks or other financial institutes.
- The next slab falls within the range of 601-750.
- This is the intermediate segment with permissible lending facilities, although, only after evaluating every financial aspect like-
- Sources of Income
- Income Stability
- Loan Security
- The third and final slab is the mark above 750.
- The borrowers who fall under this segment are considered safe to be given loans.
- A high credit score also gives an advantage to the borrower who can use this to bargain for a lower rate of interest.
How is CIBIL Score generated?
- Whenever a person applies for a loan or a credit card, the first thing that the lender looks for is the credit score or CIBIL score of that person.
- CIBIL stands for Credit Information Bureau India Limited.
- It is the first Credit Information Company in India operational since the year 2000.
- It maintains the credit activity records of companies and individual borrowers related to credit cards and loans taken from banks or any other financial outfit.
What is a Credit Information Report or CIR?
- CIBIL shares your Credit Information Report with the banks and other financial institutes that provide loans so that they can make an informed decision before giving out loans.
- Thus, CIBIL plays a significant role in helping loan providers to manage their finance efficiently.
- Credit Information Record (CIR) is generated after registering and maintaining the loan repayment records of the borrowers with due diligence every month.
- This report is shared with banks and other financial institutes to keep them updated about their current as well as potential borrowers.
- CIBIL Score or credit score are generated out of this Credit Information Record or CIR.
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How CIBIL Report is generated?
- Five key factors are considered before generating the CIBIL report that includes –
- Loan Inquiries
- Payment History
- Type of Credit opted by the Borrower
- Utilisation of Credit Limit
- New Credit Facilities
- Securities or assets used to secure the loan are also taken into consideration.
- For instance, a home loan or auto loan that's secured by some other house, fixed deposit, or financial investment is eventually expected to mature in the future.
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Factors That Affect Your CIBIL Score
Several factors impact your CIBIL Score. And if you are aware of them, you can maintain a better CIBIL Score just by being a little mindful about these factors.
- When it comes to repaying the loan, it is important to discipline.
- If you have taken money from someone, you have to repay it.
- There are no two ways to it.
- Hence, make sure that you have the re-payable amount ready in your bank account every month before the payment date arrives.
Credit Utilisation Ratio
- Credit Utilisation Ratio is calculated by dividing the amount of credit availed by the credit limit available to the borrower.
- The higher the credit utilisation ratio, the lower it brings down your creditworthiness.
Application for Loans and Credit Cards
- Every time you apply for a loan or credit card, you have to go through an inquiry that reflects on your CIBIL report.
- More such inquiries are damaging to your CIBIL Score.
Loan Types you have opted for
- It is advisable to have a mix of secured as well as an unsecured loan.
- Having too much of an unsecured loan reflects badly on your CIBIL score.
- Secured loans include our home and auto loans, while our credit card loans are unsecured.
Having No Credit History
- It is understandably difficult for a loan provider to evaluate the credibility of a potential borrower with no credit history.
Failing as a Loan Guarantor
- This happens when you have been a guarantor for some borrower who has turned out to be a defaulter.
- In such circumstances, the guarantor is black-listed by loan providers.
What does CIBIL Score indicate?
- There are several parameters that CIBIL takes into account while preparing the CIBIL Report of a person or company.
- Having in-depth knowledge about it places you in a better position to claim your rights as a borrower.
- It summarises your credit history in a 3-digit numeric format.
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Q. How to do a CIBIL Score check online?
Ans: CIBIL Score can be accessed online through CIBIL’s official website after providing KYC documents and a fee.
Q. Can I check my CIBIL Score for free?
1. As per the regulation passed RBI, CIBIL gives access to the full credit report of a person once a year for free.
2. You can avail of this service from CIBIL official website at any time of the year.
Q. How can I improve my CIBIL Score?
- It begins with paying your EMIs on time.
- Consult your financial advisor from time to time to understand how you can manage your debts better.
- Do not use too much credit to keep a low balance.
- Maintain a healthy credit mix.
- Moderately apply for newer credits.
- Keep reviewing your credit history at frequent intervals.
- Monitor your CIBIL Score smartly.
Q. What is the full form of CIBIL Score?
Ans: The full form of CIBIL is- Credit Information Bureau (India) Limited.
Q. Why is CIBIL important?
- CIBIL Score plays a crucial role in the management system of Indian financing.
- It helps individuals to secure larger amounts of loans quickly.
- CIBIL helps in getting applications approved faster.
- It helps in maintaining credit history and keeps track of your financial expenditures.
Q. What is NH in CIBIL Score?
- NH in CIBIL means No History.
- This usually means there is no credit score history available for the borrower.
Q. Is credit score different from CIBIL Score?
- No. CIBIL Score determines your account's credit history to calculate loan eligibility.
- The credit score by CIBIL range lies between 300 to 900.
- CIBIL Score is different from CIBIL Report as the former is a numeric expression, while the reports contain all the history and invoices related to credit information.
Q. What is the use of CIBIL report?
Ans: A CIBIL report is an overall credit report that includes the patrons-
- CIBIL Score
- Credit Review
- Personal Details
- Employment Data
- Contact Information
- Loan Account Data
- It helps in determining the applicants' loan eligibility.
Q. How to Check Credit Score online?
Ans: To check your credit score online, follow these steps-
Step 1- Open the official CIBIL Calculation website i.e., https://www.cibil.com/freecibilscore
Step 2- After opening the website, Navigate to the Personal tab
Step 3- On the free CIBIL Score page, click on the "GET YOURS NOW" option
Step 4- After paying particular compulsory charges, you can get a detailed invoice report after clicking ‘Get Your CIBIL Score’.
Step 5- To obtain a free CIBIL Score, you will have to fill up your Personal Information.
Step 6- In that you have to fill in your contact details, email address, and a scanned soft-copy of Government approved identity document.
Step 7- If you have previously registered, you can log in directly as a Member.
Step 8- Your credit score will be mailed to you at the registered address used during Sign in.
Q. How can I check my CIBIL report free?
Ans: You can easily check your 1st CIBIL Score/Report online for free on the official website mentioned above.
- However, if you have used it up then there is a paid subscription plan for the same which includes-
- Monthly- 550 Rupees
- 6 Months- 800 Rupees
- Yearly- 1200 Rupees
- Fill up the online form and provide personal information as asked.
- Accept the mandatory terms and conditions then proceed to the payments page.
- After verifying your account details, you will automatically receive your report at your email address.
- Usually, it takes around 24 hours for the process to get completed.
Q. Is it safe to check CIBIL Score online?
- Yes, it is absolutely safe to check your CIBIL score online.
- You can report any issues that can damage your score.
- Online tracking helps you stay updated on financial expenditures.
- Verifying your credit score online is free only for first-time users.
Q. How long does it take for CIBIL to solve disputes or errors?
Ans: From the day of sending the error notice, it might take around a month for the company to solve your issue.
Q. How to improve CIBIL Score?
Ans: The best methods to improve your CIBIL Score are-
- Track Credit Card usage frequently.
- Set Reminder alerts on Phone/Electronic Devices.
- Change Credit limits if necessary.
- Don't discard old credit cards.
- Keep clear communication with banks.