CIBIL Score is simply an individual’s credit score. It is a 3-digit numerical summary of your credit history. It is calculated based on the past borrowing and repayment details of credit as shared by the banks and lenders regularly with CIBIL.
It is provided by TransUnion CIBIL Ltd., a credit reporting agency in India.
How is CIBIL score useful?
A person’s past behavior with loan repayments is an indicator of future behavior. So, a credit score that considers the past repayment track record with other lenders helps the prospective lenders to assess the creditworthiness of its customers.
If you have a low credit score, you are considered riskier by the bank as the chances of default may be high.
What is a CIBIL Report?
A CIBIL report is a consolidated credit information report that includes your personal information, employment information, and information on all your loan accounts and credit cards along with your CIBIL Score.
Your lender will consider the CIBIL score to assess your creditworthiness and the credit information report to find out your outstanding loans.
How is your CIBIL Score calculated?
Your banks and lenders send the details of your outstanding loans, repayment track record, the type of loans you have availed, etc. to CIBIL. It assigns a weightage to each of the factors as below:
|Credit Type and Duration||25%|
What factors do not affect your CIBIL score?
Multiple factors affect your CIBIL score but some factors do not affect your credit score.
- Savings Account balance
- Education level
- Requesting a CIBIL score on your own.
Want to know how to improve your CIBIL score? Click here!
What is a good CIBIL score?
Generally, a credit score of 750 and above is considered as a good score by the majority of banks and lenders. Let’s take a look at the different ranges of CIBIL scores and what they mean.
This indicates that you have no credit history yet. Most likely, you have started earning recently or you are not an income earner.
If you have a credit score in this range, it simply indicates that you have availed credit recklessly or you have not been regular in making your repayments or you have a huge outstanding loan or that you use your credit card to the maximum or beyond the credit limit.
You might find it difficult to get further loans as your score indicates a high risk of default.
You might also be interested in 12 ways to improve your CIBIL Score.
If you have a credit score in this range, it indicates that you have defaulted on your loan repayments multiple times.
Many lenders will be hesitant to lend to you but some lenders may be ready to lend to you at a higher rate of interest.
This range of credit score indicates that you have a consistent track record of repayments and handle your borrowings very well.
It indicates that your financial health is good and you are less likely to default.
If you have a credit score in this range, it indicates an excellent repayment track record and also maintained a low credit utilization ratio.
You may get quick approval for your loan applications.
This is the best score anyone can get! You are most likely to get the best deals on loans and credit cards.