What is a CIBIL score?
CIBIL Score or CIBIL Transunion Score is checked by the Banks/NBFC before issuing a loan to the Borrower. This is checked in order to ascertain the Credit worthiness and loan repayment capability of the borrower. It ranges from 300 to 900 where 300 represents the lowest/poor score and banks consider it unfavorable. 900 is considered as favorable and represents the excellent score. A high ranked CIBIL score increases your chances of getting a loan. It helps bank to gain confidence on the borrower.
What is considered as a Good CIBIL score ?
The Ideal CIBIL score or the score most preferred by the bank to approve a loan application is 750. A 750 or above credit score is considered as Excellent credit score and loans get fastest approved because of borrowers credit worthiness. CIBIL considers score below 750 up to 550 as fair credit score. Many banks rejects loan applications or considers it risky to lend if the borrower’s credit score is below 750. Score below 550 is considered as poor and the banks straight forwardly rejects their applications without giving it a second thought. Therefore, higher the credit score, higher the confidence the lender will have on applicant and higher the chances of getting loan approval. In short, your credit score is an indication of how credit worthy you are.
Benefits of Good CIBIL Score:
- A good score helps in getting Fastest Loan Approvals.
- It helps in getting Low and competitive Interest rates.
- A good score helps in getting Credit/Loans Easily.
- It provides more Negotiating power to the borrower.
- Helps the borrower in getting fast approval of loans of Higher Limits.
- Depicts the healthy financial life or credit worthiness of the borrower.
How Reporting to CIBIL happens ?
- Firstly, Banks record Customer actions i.e. their Transaction History or Timely payment of Dues/EMI.
- Secondly, Banks send Customers Data and reports compiled by them to CIBIL.
- CIBIL provides score ratings to customer on basis of data provided by Banks.
- Lastly, CIBIL stores the customers information provided by various banks/NBFCs in its databases which can be accessed by the Lenders at time of approving a loan .
- Your score changes every time as Lenders report new information to CIBIL
How CIBIL Score is Calculated?
Following are the factors which CIBIL considers in order to calculate the score:
- Payment History of Loan dues and EMI
- Amount Owed to the Banks/ Lenders (Total Debt amount)
- Duration or Time period of your Credit history
- Credit Mix i.e. Balance between Secured and Unsecured Loans
- of Current loans and Credit Cards
- Income to Debt proportion
How to Check / Know your CIBIL score?
- You can Check CIBIL score online for free . Visit www.CIBIL.com website and fill up the online application form.
- If you want full Credit Information Report then you have to Pay online Rs 550 as charges to CIBIL.
- You have to authenticate yourself by answering some personal questions based on your Credit history (Loans and Credit Card history).
- You will receive your credit report via an email within 24 hours of submission of your application form
- In case if you are unable to validate yourself online, just take a print of the application form from the CIBIL website.
- Fill in your details and Attach your Identity proof, Address proof, Bank and Credit card statements with the form.
- You have to post the application form and above documents to CIBIL’s address.
- Post verification of your documents by CIBIL, you will receive your CIBIL report at your registered address.
How to Improve your CIBIL Score or your CIBIL Rating ?
A Healthy CIBIL score of 750 and above is necessary in order to avail a loan from Bank. If you have some settled loans or unpaid dues, you should follow the necessary Steps Required to correct or Improve your CIBIL score :
- Pay your all debts :
Pay all the unpaid due loans and credit card balances instantly. Higher the unpaid amount, lower will be your credit score.
- Pay all EMI on Time :
Pay all your loan EMI and credit card dues on Time. If you have a bad or poor CIBIL score that it helps to Rebuild your score by making all payments of your current debts on time.
- Maintain Credit Utilization Ratio :
You should make wise use of your credit Limit. Keep your credit utilization ratio to 30 % – 40 % of your available credit limit.
- Do not apply for a fresh credit:
It may result in rejection of your loan application.
- Do not Settle Loans or Dues:
Avoid settlement of your Loans or credit card dues. It badly affects your credit score.
- Keep a regular check:
You should keep a regular check of your credit score and Ensure correction in case of any discrepancies or mistakes time to time.
- Avail a Secured Credit card : Lower your unsecured loans and avail a secured credit card. You can avail it against a Fixed Deposit. Use that limit to make transactions and repay the dues or bills on time in order to boost your Credit Score.
How to Resolve CIBIL Disputes/correct CIBIL Score mistakes/ Remove name from CIBIL defaulters list ?
- Identify all the mistakes in your CIBIL Report
- Initiate dispute with CIBIL
- Fill up and Submit the online dispute form
- CIBIL initiates dispute resolution with concerned Credit Institution (CI)/Loan provider
- CI reverts stating if the dispute is valid or invalid
- If the dispute is Valid or the mistake is real, CIBIL takes the necessary steps to update or correct the information as updated/corrected by the Credit Institution.
- Generally, It takes total turnaround time of 30 days( subject to the time taken by the bank).