CIBIL score is a mathematical term that indicates your creditworthiness based on your credit history. It includes details of credit or loans that you acquired during the past years. The score represents the amount of credit taken, how much you paid back and even shows if you have defaulted on any payments. Credit score is computed on the basis of credit history by credit rating agency called CIBIL or Credit Information Bureau. The agency rates their scores from 300 to 900, 300 being the lowest score depicting an unfavourable credit record.
Why CIBIL score is important?
CIBIL score can influence processing of your loan application. In the absence of an acceptable score, banks may reject your application for loans. Once you submit your loan application, a bank or financial institution first checks your credit report and credit score. If you have a poor credit record, the bank may not consider your application at all. However, customers with good credit score can expect a speedy processing and approval of their loan requests. Thus, CIBIL scores become crucial when your want to apply for any kind of loan. The better the score, the greater are the chances that your loan request will be considered and accepted. Nevertheless, the decision to approve your loan request solely rests with the bank as CIBIL does not have any role here.
Check CIBIL score online
You can check your CIBIL score online by logging on to the authorized CIBIL website. Follow the following steps to know your score:
- Click the ‘Know Your Score’ button on the website.
- You will be guided to an online form. Fill in your details like name, D.O.B, official/residential address, contact details, identity proof, formerly availed loans etc.
- On completing and submitting the form, you will be led to the payments page, where you are required to pay a sum of Rs. 470 either through debit/ credit card or internet banking.
- On successful payment of the sum, you will be transferred to the verification page. Here, you are required to answer 5 questions related to your credit history. Replying at least 3 questions rightly will validate your identity. A credit report will be sent to you on your email address within 24 hours.
- If verification fails, you can mail a printed application duly completed together with your CIBIL generated id and address proof. The credit report will be sent to by post at the address mentioned by you.
Free credit report: CIBIL does not provide free credit reports. However, banks receive a concise credit report when you ask for a loan. You can request banks to share this report for viewing purpose. However, we advise against it as the number of enquiries might unfavourably impact your future credit request if your loan application is rejected.
Check CIBIL score offline
There basic CIBIL report called as CIR report contains fundamental information about your credit history and additional information that is there with CIBIL. This report costs Rs 142 and is sufficient if you want to know your standing with CIBIL.
CIBIL report Vs. CIBIL score
CIBIL report is a comprehensive description describing all your previous credit transactions including payments and borrowing to/from financial institutions or banks. On the other hand, CIBIL score is a numerical figure calculated on the basis of statistical analysis of the credit report and ranges between 300 and 900.
It has been noticed that sometimes banks commit few mistakes in your CIBIL report. These mistakes arise either due to human errors or delay in forwarding your details. If you notice any discrepancies while checking your CIBIL report, kindly inform your bank to get in touch with CIBIL as soon as possible and communicate the mistakes. If you have cleared some loans, ask your bank to inform CIBIL about the same so they can issue an updated CIBIL report. The report is extremely crucial for your financial future so don’t do anything that might affect it negatively in the long run.
Factors that can affect your CIBIL score
Some of the factors that affect your CIBIL score are discussed below:
- Payment record:Your payment records play a significant role in generating a good CIBIL history. Defaulting on your credit card payments or delaying/failure to pay EMIs regularly can adversely impact your credit score. Such actions indicate that you are either incapable or not serious about clearing your current debts.
- Surpassing your credit limit:Going beyond the limit of your credit card affects your credit score negatively as it is enhances your repayment load. However, increased expenses on your credit card will not hamper your credit score provided that your credit consumption is consistent with your credit limit.
- Unsecured finances:A high proportion of unsecured finances like credit cards and personal loans can impact your credit score. Maintaining a balance between unsecured and secured finances will contribute optimistically to the credit score.
- Numerous credit cards and loans:Owning numerous credit cards or accounts and applying for multiple loans may influence your credit score as banks might become cautious while considering your loan application.
It is imperative to maintain a good credit score to obtain more credit in future. In this regard, make sure that your credit report portrays an optimistic outlook that converts to improved scores. In case your credit report lags behind in some segments, you should actively work toward building a better report by paying debts punctually and maintain an optimistic outlook on it.