CIBIL Score

A CIBIL Score is a numeric representation of your credit history. It reflects your past credit behaviour and management of various credit products, such as personal loans, credit cards, home loans, business loans, and auto loans. CIBIL Score is a three-digit numeric value that ranges from 300 to 900. TransUnion CIBIL (Credit Information Bureau (India) Limited) provides this score.

 

A higher score signifies responsible credit management, facilitating easier access to loans and better interest rates. Regularly monitoring your CIBIL Score can help you maintain a strong financial profile and enhance your borrowing opportunities.

 

What is a Credit Score?

A credit score indicates how well you manage your credit products. It is offered by the four official credit bureaus of India - Equifax, CRIF High Mark, Experian, and TransUnion CIBIL. Each of these calculates your scores on the basis of your repayment history, existing credit accounts, and so on. However, the computation method, score ranges, etc., usually differ from one bureau to another.

 

The score generated by TransUnion CIBIL is one of the most widely used scores in India. Usually, a score of 750 or more is considered to be ideal.

Take a look at CIBIL Score ranges:

 

Excellent CIBIL Score (between 750 and 900)

You have an outstanding credit record, which helps you exceed the basic eligibility criterion set by most lenders. It enables you to qualify for the best credit offers available.

 

Good CIBIL Score (between 700 and 749)

You are close to a strong credit score. Improving your credit management will help you access better loan and credit card offers. You have a good credit record, which helps you meet the basic eligibility criteria set by most lenders. It also allows you to qualify for suitable credit offers.

 

Average CIBIL Score (between 650 and 699)

Individuals in this category should focus on improving their credit history by making timely payments, which helps establish trust in their creditworthiness. Certain lenders do provide personal loans to applicants with CIBIL Scores within this range. However, these loans may come with higher interest rates or shorter repayment terms.

 

Poor CIBIL Score (between 550 and 649)

This score reflects poor credit behaviour, which has affected your credit history. By reviewing your credit report and taking corrective actions, you can work towards improving your score.

 

Bad CIBIL Score (Between 300 and 550)

Your credit history shows significant damage. Immediate measures should be taken to improve your score to become eligible for future credit at better rates.

 

NH (No History)

This category indicates individuals who have no credit history or have not used credit products. Since there is no score available, you must focus on building a positive credit profile through responsible use of credit and financial discipline. This includes getting a credit card or a small loan, making timely payments, settling your dues and bills, etc.

Lenders check your CIBIL Score to gauge your creditworthiness and assess the risk of extending credit. As per the official website of TransUnion CIBIL, over 79% of loans are approved for individuals with a CIBIL Score above 750, as it reflects responsible credit management. A high CIBIL Score not only increases your chances of approval but may also lead to better loan terms, such as lower interest rates or higher loan limits. On the other hand, a score below 600 is often considered risky, leading to rejections or loans with stricter conditions and higher interest rates.

A good credit score is generally considered to be above 750. This shows lenders that you are a responsible borrower, making you more likely to be approved for loans or credit cards with favourable terms and lower interest rates. It also improves your chances of getting the best financial products. Regularly checking and maintaining your credit score is key to financial health.

A good CIBIL Score may grant you access to premium financial products. These include higher-tier credit cards with exclusive benefits or loans with added perks like insurance coverage. Take a look at some of the benefits:

 

Easier Approval for Loans and Cards

A good CIBIL Score often leads to lenders offering higher credit limits on credit cards and loans, as it demonstrates your ability to manage larger amounts of credit responsibly. With a strong credit score, lenders can expedite the loan approval process since you are perceived as a lower risk. This can be particularly beneficial for urgent financial needs.

 

Lower Interest Rates

Individuals with higher CIBIL Scores are seen as less risky, which often translates into lower interest rates. This can save you a significant amount of money over the life of a loan or credit card balance.

 

Access to Higher Credit Limits

A good score may also make you eligible for higher credit limits on your credit cards. This can help improve your credit utilisation ratio and allow you to manage large expenses more effectively.

 

Easier Approvals for Rental Agreements

Some landlords and property management companies check your CIBIL Score to assess your reliability as a tenant. A good score can help you secure a rental agreement more easily, with fewer upfront requirements.

 

Better Insurance Premiums

Insurance companies may check your credit score to determine premiums for certain policies, such as car or home insurance. A good CIBIL Score could lead to lower premiums, helping you save money on insurance.

 

Improved Negotiation Power

A high CIBIL Score gives you leverage to negotiate better loan terms, such as flexible repayment options or lower processing fees. You may have more room to ask for favourable repayment terms or request a higher credit limit. If you plan to co-sign a loan for someone else, your high CIBIL Score will increase the likelihood of approval and may secure better terms for the primary borrower.

Your CIBIL score is calculated based on several key factors that reflect your credit behavior:

1. Credit or Repayment History: It includes your past repayment track record on loans and credit cards. Timely payments boost your score, while missed or delayed payments can hurt it.

2. Credit Utilisation: This refers to how much of your available credit you're using. Keeping your credit utilisation below 30% is recommended. High usage can indicate financial strain, negatively impacting your score.

3. Credit Mix and Repayment Duration: A healthy mix of secured (like home loans) and unsecured (like credit cards) credit is beneficial. Longer repayment histories show responsible credit behaviour and can improve your score.

4. Credit Inquiries: When you apply for new credit, lenders perform inquiries (hard inquiries) to assess your risk. Too many inquiries in a short time can lower your score, as it might indicate that you are struggling to secure credit.

Here are several things considered by credit bureaus when computing your CIBIL Score:

• Repayment History

Consistently paying your EMIs and credit card bills on time has the biggest impact on your CIBIL Score. Missed or late payments lower your score significantly.

• Credit Utilisation Ratio

This is the percentage of your credit limit that you use. A high utilisation ratio (above 30%) signals heavy dependence on credit, which can negatively affect your score.

• Number of Credit Inquiries

Every time you apply for a loan or credit card, the lender checks your credit score, which counts as a hard inquiry. Too many such inquiries in a short span can lower your score.

• Credit Mix

Having a healthy balance of secured loans (like home or auto loans) and unsecured loans (like personal loans or credit cards) improves your score. Relying too much on one type of credit can hurt your rating.

• Length of Credit History

The longer your credit history, the better your score. This includes how long you have held your oldest account and the average age of all your accounts.

• Outstanding Debt

Having a lot of unpaid or high outstanding debt negatively impacts your score. It’s crucial to keep your debt levels low and manageable.

• Loan Settlement or Write-offs

If you have settled a loan for less than the full amount or had a loan written off by the lender, it will be noted in your credit report and lower your score.

Your CIBIL Score might be low due to various reasons, such as:

• Irregular credit card or loan repayment

• Missed EMI payments

• Too many unsecured loans

• Multiple hard inquiries

• The discrepancy in the credit report

If you have a low CIBIL Score, here are a few ways through which you can improve it:

• Pay your bills on time

• Avoid taking too many loans at the same time

• Maintain a good credit mix

• Review your credit report at regular intervals

• Don't utilise the full extent of your credit limit

You can check your CIBIL Score for free through a simple and quick digital process on Bajaj Markets. Follow these steps to calculate your CIBIL Score for free:

• Click on the ‘CHECK YOUR SCORE’ option on this page

• Enter a few personal details, such as your name, mobile number, date of birth, e-mail ID, PAN details, and residential pincode

• Select your employment type from the options provided

• Agree to the terms and conditions

• Click on 'GET REPORT'

• Enter the OTP sent to your registered mobile number and click on ‘SUBMIT’

• On verification of details, you will be able to view your CIBIL Score

 

For better surveillance of your credit score, consider checking your report often. On the Bajaj Markets App, you can easily access a customised report. It offers a detailed view of your credit cards, loans, and personalised tips to improve your score. 

 

Additionally, it includes tailored financial offers based on your credit profile. The app includes widgets like 'DID YOU KNOW' and 'IMPROVE YOUR SCORE.' These provide you with insights to help you manage your credit score better.