CIBIL is the acronym for Credit Information Bureau (India) Limited, the leading credit bureau in India which determines the credit score of every borrower in the country.
Lenders check your CIBIL score to determine whether you meet the minimum acceptable requirements for a loan when you apply for one.
You can find your CIBIL score online using your PAN number. However, it is important to have a clear understanding of what the CIBIL score is and why it is so important.
Keep reading to understand the meaning and full form of CIBIL and its importance in detail.
What is the cibil score?
CIBIL score, which ranges from 300 to 900, is an important element in scoring an individual's creditworthiness. This figure illustrates the financial dependability of an individual that depends on their credit history and repayment pattern. The higher the score, the lower the credit risk you have. CIBIL increases your chances of getting approved for a loan or being offered favourable terms.
CIBIL employs sophisticated algorithms and data over a period of up to six months to assess an individual’s credit score. It is very important as it helps lenders determine the risk level of the loan they intend to lend to an individual or a business.
Must Read: Disadvantages Of Having A Bad Credit Score
Cibil score range
A CIBIL score normally starts from 300 to goes up to 900. With a score of 750+, you would fall within the category of good payers, who show responsible habits towards borrowing. Here is a table with different CIBIL ranges:
| CIBIL Score | Category | Meaning |
| NA/NH | Not Applicable or No History | If you do not use a credit card or have never taken a loan, you will have no credit history. |
| 300-549 | Poor | Irregular repayments or defaults on credit card bills or EMIs, high credit exposure, considered high risk, difficulty in getting loans or credit cards. |
| 550-649 | Fair | Some irregularities in past payments, like late payment of bills or multiple credit inquiries, might get credit but with higher interest rates. |
| 650-749 | Good | Displayed responsible repayment behaviour and longer credit history. Most lenders consider applications, but not the best interest rates. |
| 750-900 | Excellent | Regular with credit payments and exemplary credit history, considered low risk, offered better deals on loans and credit cards. |
Must Read: Everything You Need to Know About Your CIBIL Score
Importance of a good cibil score
An excellent CIBIL score (normally between 700 to 900) can have a substantial impact on an individual's credit. Lenders note this score when assessing loan and credit card applications. It makes them more likely to trust you as a worthy borrower.
- Lower interest rates on loans, which in turn reduce overall loan costs.
- Acquiring high credit amounts facilitates more sophisticated financial transactions.
- Better repayment conditions including an extended or flexible payment period basically lightens the pressure on repayment.
- Shortened loan approval time, making it possible to get funds on time.
- Rise in the number of available credit institutions ready to give you the right rate you can afford based on your credit history.
CIBIL rate calculation
Payment history (30%) :
Timely payments of bills, loans and EMIs are the ways to improve credit score. Delays lower it.
Credit utilisation (25%) :
The credit score goes down if the credit usage is high relative to the limit. Best to keep under 30% of the loan limit.
Credit type and duration (25%) :
It is valuable to be the holder of both unsecured credit (credit cards, personal loans) and secured credits (auto, home loans). A longer credit history is best.
Credit enquiries (20%):
The credit applications in a short time interval, especially those of credit cards, lead to a drop in the score. Each enquiry counts.
Together, these factors describe your CIBIL score. The table below breaks down their importance and how they can be affected:
Must Read: Multiple Credit Cards: How Do They Affect Your Credit Score?
Steps to check your cibil score
Getting your CIBIL Score report online now is a lot easier because of RBI’s mandate to credit companies. These are the steps to check your CIBIL report:
Visit cibil website
Check the CIBIL website and select either "Know Your Score" or "Get your CIBIL Score".
Login or create account
Sign in with your login information or make an account by entering your name, contact number, email address, and password.
Provide identification documents
Include proof of ID (passport number, PAN card, Aadhaar or Voter ID) as well as information such as your postal code and date of birth.
Submit form
Fill out the form and send your information.
Verify identity
Get a verification OTP to your registered mobile number and email address and prove your identity.
Check your Score
Log in to your dashboard and check out your CIBIL credit score.
Access credit report
Click on “Credit Report” to open your whole credit report.
Authentication
Fill in personal data that are related to your credit history as a way to authenticate your identity.
Receive report
You will get your complete credit report at your email registered within 24 hours.
Conclusion
Understand CIBIL score limits and what they mean for your financial standing. Be responsible when spending money to earn a good repayment history. Optimise your CIBIL rating to be able to leverage the lending process easily under good loan terms. During the application process for a Personal Loan, you should bear in mind that your financial profile and CIBIL score are the key factors in making sound choices. Check your credit score on the CIBIL website at least once a month to keep yourself updated and to take relevant measures.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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