CIBIL Full Form & Tips to Improve Your Score
Credit Information Bureau India Ltd. is the full form of CIBIL. It is one of the major credit bureaus or credit information companies in India that is backed by TransUnion International. CIBIL keeps track of all business and personal credit-related activities. Many banks and a number of financial institutions regularly provide information to the CIBIL.
The CIBIL score is a number that financial organisations use to evaluate your creditworthiness. It helps with loan or credit card applications.
What is CIBIL Score in India?
CIBIL score in India is a 3-digit figure on the credit report. The credit bureau considers your overall debt from all lenders and your payment history when calculating your CIBIL. The CIBIL range is 300 to 900, with 300 being the lowest and 900 denoting the highest. A score between 700 to 749 is considered ideal for credit applications.
A score of 750 or higher is regarded as outstanding and boosts your chances of having your credit approved. You should try keeping your CIBIL close to 900 if you want to acquire credit easily. Also, note that the CIBIL score is usually called the credit score in India.
CIBIL Score Range in India
| CIBIL Score Range | Rating |
| 300-499 | Poor |
| 500-649 | Average |
| 650-749 | Good |
| 750-900 | Excellent |
What is a CIBIL Report?
In addition to the credit score, CIBIL also provides credit reports for individuals and businesses. All lenders carefully review the CIBIL report before authorising a credit application.
Your CIBIL report includes your CIBIL score, credit record, repayment history, personal details, employment records, banking information, contact information, and details of hard inquiries.
Similar to an individual’s report, a company’s CIBIL report includes information about its credit record. It has information regarding ongoing debts, pending legal matters, and preexisting credit. The agency carefully preserves this data throughout time by collecting it from financial organisations.
You should review your credit score and credit report at least once a year. You can check your credit rating at Piramal Finance for free. Access your CIBIL and your credit report with just a few simple details.
Why is CIBIL Score Important?
A high CIBIL score, or one that is between 700 and 900, is quite favourable. Banks and other lenders assess it when evaluating loan and credit requests. The CIBIL score is your first impression in a credit application. A good CIBIL score means greater chances of having your loan application granted. As a result, it is beneficial to maintain a good CIBIL score to get your credit requests approved.
You have a better chance of securing a loan if your CIBIL score is good. You can also bargain for better credit conditions and lower fees and penalties. You get more benefits such as:
- Lower loan interest rates
- Increased credit limits
- Better terms for repayment, including a long, flexible payback period
- An expedited loan approval procedure
- More lender options
Factors Affecting a CIBIL Score
Some of the major factors affecting your CIBIL score are as follows:
Repayment History
Your CIBIL score is used by lenders to assess your ability to manage debt and credit. Your credit score could suffer if you have a repayment history that includes late payments or failed EMIs.
Credit Utilisation Ratio
As much as 30% of the overall credit limit is the recommended credit utilisation ratio. A person’s inability to manage money effectively and reliance on credit is indicated to credit bureaus when that individual has a higher credit utilisation ratio. As a result, the applicant’s credit score is negatively affected.
Number of Credit Inquiries
When you apply for a new credit line, the lender looks at your credit report. Each draw is considered a hard inquiry, temporarily lowering your CIBIL score. Avoid frequently submitting multiple loans or credit card applications.
How to Improve CIBIL Score?
It is necessary to have a high CIBIL score since it can influence banks and other lending institutions when you apply for loans and other forms of credit. Here are some ways you can improve your CIBIL score:
Pay Dues on Time
You should be disciplined and create reminders for your payments. Your CIBIL score may be significantly impacted by how you handle unpaid debt. You also pay a fine for late EMI payments; this also hurts your CIBIL score. Therefore, if you want to raise your CIBIL score, pay your bills on time and maintain a good score.
Credit Mix
Maintain a good credit mix. It is advised to have a balanced credit portfolio. You can have secured (such as a mortgage or car loan) and unsecured (such as a personal loan or credit card) loans. You can also have credits with both long and short terms. A surplus of unsecured debt could be perceived poorly.
New Credit Cards Very Frequently
Take into account whether you require any additional credit card accounts. Multiple unused credit lines will incur additional fees and have no positive impact on your CIBIL score.
How to Check Your CIBIL Score?
RBI mandates that credit bureaus give people access to their credit reports online. You can check your credit score simply by visiting the credit information company’s web portal. Here are the steps to check your credit score on CIBIL.
- Visit the CIBIL website and go to its credit score page.
- Login into your CIBIL account.
- Enter the details, such as your PAN number, DOB, and address, to confirm your identification.
- Enter the OTP sent to your linked email or mobile number.
- You will see your debt and other information on the following screen. Check for any errors in the report. Also, report if there is any missing record or additional information.
You can also check your credit score on Piramal Finance for free. You only have to enter your details, and you will get your credit score in a few simple steps.
Conclusion
It is clear that a good CIBIL score is necessary, especially when planning to apply for credit. Banks and other financial entities that lend money basis a high CIBIL score. Therefore, to prevent loan rejection due to a low CIBIL score, it is advised to maintain and improve your CIBIL score.
Visit Piramal Finance to read more such blogs on credit scores and finances. You can also check out the housing loan and personal loan sections.