What is CIBIL and what does it have to do with your credit score?
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What is CIBIL and what does it have to do with your credit score?

  • Highlights

  • TransUnion CIBIL is a bureau that checks your credit score

  • It maintains a detailed record of your credit history

  • Basis your history, it creates your credit report and score

  • Lenders gauge your credibility by assessing your CIBIL score

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 CIBIL and your CIBIL credit 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 name of the credit bureau that creates the score. CIBIL used to refer to the Credit Information Bureau (India) Limited. In 2000, it partnered with US-based TransUnion and the company is now called TransUnion CIBIL Ltd. CIBIL is the oldest credit information company 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. So, if you have ever availed or applied for credit, CIBIL has your information as it is updated by lenders like banks, credit card companies, and NBFCs on a monthly basis.
Additional Read: How Credit Score is Calculated

Things to know about CIBIL Score

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, on-going 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 your credit score and all these details by downloading this report from the CIBIL website. Doing this helps you stay informed about your credit record, and helps you report errors, if any, to CIBIL.
Additional Read: Best Place To Check Your CIBIL Score

Your Cibil Credit Score Is Derived from This Credit Report

Apart from 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 scorewill keep changing based on your credit report and your credit behaviour. For example, if you miss EMIs or make 5 personal loan enquiries in quick succession, your credit score will drop. On the other hand, when you pay your EMIs on time, prepay your loan, or pay the full amount due on your credit card on time, your CIBIL credit score will increase.

Your Credit Score Is Important to Lenders to as Certain Your Credit Worthiness

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 loans. Thus, lenders can use your CIBIL credit score and CIBIL report to assess your borrowing capacity and your repayment strength.
Additional Read: How Much CIBIL Score Required For Personal Loan

Checking and ensuring that your CIBIL credit score is high is thus very important.

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