What do you mean by CIBIL Score?
Your CIBIL Score is a 3-digit numeric summary of your credit history, rating and report and ranges from 300 to 900.
When you are considering a loan or checking the eligibility requirements of various lenders, you may have come across something called your CIBIL credit score. With every article you read and every experienced borrower you meet urging you to check your credit score, knowing what it is and why it is so important in the process of taking a loan is paramount. Here’s everything you need to know about your CIBIL score.
CIBIL is India’s first credit information company
Your credit score is often referred to as your CIBIL score because CIBIL stands for the credit bureau's name that creates the score: Credit Information Bureau (India) Limited. In 2000, it partnered with US-based TransUnion. The company is now called TransUnion CIBIL Ltd. CIBIL is the oldest credit rating agency in India and functions based on a license granted by the RBI. It adheres to the Credit Information Act of 2005 and records the repayment of loans and credit cards by both individuals and companies. If you have ever applied for credit, CIBIL has your information as it is updated by lenders like banks, credit card companies, and NBFCs every month.
Additional Read: How credit score is calculated
CIBIL creates your credit report
Using this information related to your credit activities, the company creates your CIBIL report or Credit Information Report (CIR). Your repayment and borrowing history, ongoing loans, credit card dues, etc., are all compiled by CIBIL and presented in your CIBIL report. It also contains your employment history and loan enquiry information. You can check these details by downloading this report from the CIBIL website. Doing so helps you stay informed about your credit record and enables you to report any errors to CIBIL. Now, you can check your CIBIL score for free with Bajaj Finserv at no extra cost. All you have to do is enter your basic details.
Additional Read: Best place to check your CIBIL score
Your CIBIL Score is derived from the credit report
Besides creating a credit report that details your credit history, CIBIL also gives you a credit score. Even companies have a commercial CIBIL score based on their credit history and credit report. Your CIBIL credit score will keep changing based on your credit report and credit behaviour. For example, your credit score will drop if you miss EMIs or make 5 personal loan inquiries in quick succession. On the other hand, when you pay your EMIs on time, prepay your loan, or pay the total amount due on your credit card on time, your CIBIL credit score will increase.
Your credit score is essential to evaluating your creditworthiness
Just as lenders provide CIBIL with your credit-related information, they also access the same from CIBIL from time to time. As your CIBIL credit score denotes how good your credit history has been, it is used to judge your credibility when you apply for any form of credit, including an instant personal loan. Checking and ensuring that your CIBIL score is high is thus very important.
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