While applying for a loan, you might come across terms like “CIBIL score” and “CIBIL report.” Terms like these often confuse you if you are new to the financial world. But what are these terms, and are they important?
In the financial world, these two words have significant meaning and value. Without them, you cannot get a credit card or loan approval. You need to understand the meaning of and the difference between a CIBIL score and a CIBIL report so that the next time you are applying for a credit card or a loan, you will have enough knowledge of how these two work.
What is CIBIL?
TransUnion CIBIL Limited, formerly known as Credit Information Bureau Ind Limited (CIBIL), is a credit rating agency or credit bureau that keeps track of all credit-related activity for businesses and individuals, including loans and credit cards.
The bureau offers information and resources to help people understand their credit history and financial reputation and protect them against identity theft and potential fraud. The agency lets the lender know exactly how much the borrower can pay back and whether or not their money is safe.
Read on to understand the difference between the CIBIL score and the CIBIL report.
What is a CIBIL score?
The teachers give their students scores according to their performance, be it monthly or yearly. In the same way, CIBIL acts as a teacher and gathers credit histories from banks and financial institutions. It then evaluates and assigns the CIBIL score to the specific borrower.
A CIBIL score, or credit score, is a three-digit number that represents a borrower’s history and credit profile over a couple of months or years. The CIBIL score shows the borrower’s creditworthiness for borrowing a loan and making timely repayment. Through a credit score, lenders get a clear picture of the borrower’s credit performance, allowing them to decide if their money is in safe hands.
The table shows how your CIBIL score increases or decreases your chance of getting a loan.
|CIBIL Score||Status||Chances of getting a loan.|
|300-549||Poor||There is no chance of loan approval.|
|550-700||Fair||Fewer chances of loan approval.|
|700-900||Good||Good chances of loan approval.|
|900-Above||Excellent||Instant loan approval.|
What is a CIBIL report?
A CIBIL Report, also known as a Credit Information Report (CIR), is a document containing a CIBIL score and an individual’s personal and credit-related information. Banks, financial institutions, and lenders provide credit information to credit bureaus to compile an accurate CIBIL credit report. The lender uses this report to determine the creditworthiness of the borrower.
An individual’s CIBIL report may have the following:
- Personal details include name, gender, date of birth, PAN number, and permanent house address.
- Contact information such as email addresses, phone numbers, and landline numbers.
- Employment details like income.
- Account details, including the
- number of accounts,
- the types of loans borrowed,
- any loans paid off,
- any outstanding debts,
- credit card information, and
- credit card cancellations.
- Inquiries that lenders and banks make when someone applies for a credit product.
- CIBIL credit score (based on a person’s repayment history) and other credit-related information.
Frequently Asked Questions.
Q1. Are the CIBIL score and CIBIL report the same?
The CIBIL score and CIBIL report are not the same. But both are interrelated. A CIBIL score is a three-digit number that represents an individual’s timely repayment capacity. A CIBIL report is an entire document containing a CIBIL score and an individual’s personal and credit-related details.
Q2. What are the benefits of having a high CIBIL score?
The following are the benefits of having a high CIBIL score:
- Faster loan and credit card approval.
- Lower loan interest rates.
- The better credit card offers.
- The higher credit limit on credit cards.
- Reduction in the processing fee and other costs associated with loan applications.
Q3. What does CIBIL score 1 mean?
A CIBIL score of 1 indicates that no credit history data is available for the borrower. This score is also known as “NH” or “no history” because there is no information to report.
Q4. What is a bad CIBIL score?
Scores on the CIBIL scale vary from 300 to 900. A credit score between 300 and 549 is considered poor. It means you have the slightest chance of loan approval.
Q5. How can I get a 900 CIBIL score?
The average time it takes to raise your CIBIL score is a few months. Make sure to pay your bills on time, maintain a healthy balance of secured and unsecured loans, and refrain from initiating too many credit inquiries in a short period to get your credit score closer to 900.
The bottom line
Both the CIBIL score and the CIBIL report are not the same. But both are closely related. The CIBIL score shows the creditworthiness of an individual and gives the lender confidence in lending credit. In contrast, the CIBIL report contains the CIBIL score and an individual’s personal and credit-related details.
Just as you would like your child to receive a good grade and report card at the end of each year, to maintain a good credit score, always pay your equated monthly instalments (EMIs) on time. Never opt for a loan beyond your repayment capacity, as this might lead to an outstanding debt. Call 1800 266 644 or apply for a loan right away.