Understand the CIBIL Score

What is a CIBIL score? What is a CIBIL report?

A CIBIL score or CIBIL report gives a status of your financial history. It is prepared by TransUnion CIBIL Ltd., formerly known as Credit Information Bureau(India) Ltd.

The CIBIL score is a three digit number generated using information about a person's credit history. The credit history is compiled from data taken from financial institutions, banks and loan providers.

The CIBIL report has more details like loan history, repayment information and status of current loans

How is my CIBIL score determined?

The organization takes into consideration many parameters to arrive at the CIBIL score. It considers

• Credit History – Performance on past debt obligations is given a weightage of 30% approximately
• Credit Type and Duration – The portfolio of loans (Secured/Unsecured) and how long the loan is taken for is given a weightage of about 25% 
• Credit Exposure – Extent of loans taken is given a weightage of about 25% 
• Other Factors – Factors such as recent credit behaviour, credit utilization, credit applications etc. are given a weightage of 20% approximately.

Using the data on these factors, a score between 300-900 is given with 300 being the lowest CIBIL score and 900 being the highest score.

What is a good and bad CIBIL score?

This table shows the CIBIL score and the meaning of the score. For example, if you have a CIBIL score of 450, lenders will hesitate to give a loan to you as it means there is a high chance that you may not repay the loan. If you have a score of 670, you may get a loan but the interest rate might be high. On the other hand if you have a score of 800, lenders would willingly offer a loan to you at the most competitive rates. You can choose the loan that best suits your requirements.

How can I get information on my credit score?

You can request for a credit report from CIBIL. CIBIL provides one CIBIL Score and Report without any charge once a year. If you need more reports, you can opt from a range of plans that CIBIL provides.

How can I ensure that I have a good CIBIL score?

It is important to have a good CIBIL score. Some tips to ensure that you maintain a good CIBIL score -

• Ensure that you pay off your credit card dues on time and in full.
• Do not keep too many credit cards. For example, if you have 8 credit cards, you give the impression that you are always looking for credit.
• Pay various bills such as telephone bill, utilities bill on time. Pay the full amount.
• If you have joint loans or any other such accounts, make sure the other person also maintains a good credit history and payment schedule.
• Do not apply only for unsecured loans. You should have a mix of secured (with collateral) and unsecured loans.
• Review your CIBIL report regularly so that you can manage it and also raise inaccuracies if any in the report or score to the organization and rectify it.

There are other organizations that offer credit scores too. These are Experian, Equifax and High Mark. A CIBIL score is a reflection on your financial behaviour. If you have a low score, you can take steps to improve your financial discipline which will improve your credit score as well as your financial behaviour.