December 4, 2024 · 11 mins read
Santosh Kumar
While many credit bureaus evaluate individuals' credit scores, the CIBIL Score / TransUnion Credit Score is one important score that many banks and lenders rely on. The CIBIL score is for individuals and helps lenders evaluate the borrowers' financial reliability and repayment probability.
TransUnion, which was formerly known as CIBIL (Credit Information Bureau (India) Limited), is one of the major 4 credit bureaus in India. Many lenders, banks and financial institutions report the credit-based activities of their customers to CIBIL. Based on your credit activities in the past, CIBIL will assign you a credit score commonly called the TransUnion CIBIL score to summarise your level of creditworthiness in terms of a 3-digit numerical value. The CIBIL score falls within the range of 300 to 900, and 900 is the best score you can get. With a higher credit score, you are a creditworthy borrower who will show ultimate responsibility in repaying your loan EMIs and credit bills from the point of view of the lenders.
Would you prefer to lend money to your friend or relative? If so, the past financial dealings with that person would be satisfactory, and you have confidence that the person will pay back your debt, right? You are confident because you personally know the person. But how can banks rely on every borrower? Can they individually check on how reliable they are at repaying the credits? It's practically not possible. Yet, they cannot reject all the credit or loan applications they receive. So, they get the help of credit reports and the borrower's credit score provided by major credit bureaus like CIBIL. Higher credit scores prove that they have paid the bills and EMIS on time in the past, and a lower CIBIL score is a warning sign that the borrower is not reliable.
Your CIBIL score is not just a number. It signifies your financial creditworthiness and the probability of getting your new credit products approved.
1. Excellent score range- 750 to 900: If you are in this score range, then congrats. You are in the safest range, and lenders see you as a reliable borrower. Your loan or credit card approval process will be smooth and fast, and you will get a higher credit limit, the best interest rates, and a longer tenure.
2. Good score- 650 to 750: If your CIBIL score is within this limit, then you are a good borrower and will be eligible for loans and credit products at lower interest rates.
3. Average score- 550 to 650: If your CIBIL score is within this average credit score limit, lenders will have trouble believing your repayment capacity and may approve credit cards and loans of lower amounts and at higher interest rates. An average score may be a result of any payment default in the past.
4. Poor score- 300 to 550: If you fall within this score limit, it symbolises that you have had serious payment defaults in the past and will be considered a risky borrower. Lenders will reject your credit application or may consider collateral to approve it.
5. NA Score: This is a score given by CIBIL for newbies. If you have never used credit products in the past, the credit bureau will have no data to evaluate your credit score, and hence, you will get an NA score.
Read More:: What is Experian Credit Score and How It Affects You
Maintaining a good CIBIL score is always recommended as it has numerous benefits.
1. With a good score, you will be considered a non-risky borrower, and hence, your loan application approval process will be faster and easier.
2. As the lenders are assured of your financial creditworthiness, they will be ready to sanction you higher credit amounts but at lower interest rates.
3. Some jobs involving cash handling need trustworthy candidates; hence, employers prefer candidates with excellent credit scores to handle those jobs. Your good CIBIL score is evidence of your financial responsibility, hence, you will be eligible for such roles.
4. In this digital world, some landlords are utilising the credit score to make informed decisions about lending their property to anyone.
Maintaining a healthy CIBIL score is always a good practice, as it may benefit you in many ways.
Read More:: Is 772 a Good CIBIL Score?
Checking your CIBIL score will help you stay on track to a good score level. You can understand whether there is a hike or drop in your score and can take steps to improve if you have a low score. Moreover, you can rectify any issues in your credit report, like wrong personal details or wrong information about your payments, as early as possible if you frequently do TransUnion CIBIL score checks.
A good CIBIL score is essential for your financial health, but how can you check your CIBIL score? Here you are. It is very simple, and you can check your score online free of cost once a year.
Checking your CIBIL score offline is simple but is time-consuming. You will need an ID and address proof as supporting documents for verification. Just download the form from http://www.cibil.com/sites/default/files/pdf/consumer-request-form.pdf and mail the duly filled form along with a demand draft in favour of TransUnion and supporting documents to the CIBIL office. Your documents will be verified and if satisfactory, your CIBIL report will be mailed to your address.
Read More:: Is 776 a Good CIBIL Score?
Checking your score online is easier than offline. You need to register on the CIBIL website to check your score, and there are various subscription plans, each with its perks. CIBIL lets you check your score for free once a year.
If this is your first time checking the score, you need to register in CIBIL by following the steps below.
1. Visit https://www.cibil.com/
2. Click on the “New User” or the "Get Your CIBIL Score for Free" button.
3. There will be different plans. Choose your best and click the “Subscribe” button corresponding to the plan.
4. On the registration page, enter your personal details, such as your email address, name, phone number, date of birth, and ID details.
5. Upload your ID proof and address proof documents.
6. If you have chosen any plans, you will have to make the payment to complete the registration process.
7. Your login credentials will be emailed to you, and you can now log in to check your CIBIL score and report.
Read More:: What is CMR Rating in CIBIL?
We may need financial support at any time. So, we should always be ready to access credit products and maintain a good CIBIL credit score to do so easily and quickly. Here is an easy-to-do list to maintain a good score.
Missed, late and partial payments will bring down your credit score. The first rule to avoid this is never to opt for credit products that are not affordable with your income. If you have availed credit products, make it a habit that you never delay or miss any payment. Set reminders so that you never forget a payment and reserve the amount for your next month's bill a month ahead to ensure that you never miss or delay payments due to lack of money. Note that payment history has the highest impact on the credit score and even a single delay by one day will negatively impact your score value.
Both while availing of new credit products and repaying the bills, planning is one important aspect that will help stay on track. Before availing of credit products, analyse your budget to make a decision on whether or not to opt for it. While paying back your bills, for some unavoidable reason if you can't make a payment, decide on which bills to pay first to avoid higher penalties. If you have two credit bills, try to make the highest bill payment, as it will have more penalties.
Hitting your maximum credit limit is occasionally ok. But if it becomes a monthly event, then you are at a higher risk of decreasing your CIBIL score. Yes, a higher ratio symbolises that you are depending highly on credits for your financial needs and adding another credit to your current financial burden will push you towards payment defaults. Hence, maintaining a 30% credit utilisation ratio is advisable.
Read More:: Reasons For Loan Rejection Despite Good CIBIL Score
Yes, older credit accounts with a good repayment history insist on your creditworthiness for longer and symbolise your experience in wisely managing credits. So, try to keep your older accounts active.
While co-signing for loans or credit products, you will be held responsible for any payment defaults. So, co-sign for your friend or relative whom you are confident will pay bills on time.
If your payment details are not updated or wrongly updated, then your CIBIL score will be calculated based on the wrong details. Your payment details and any wrong personal information, like a wrong phone number or invalid address, will make your report suspicious. So, you must check your credit score, report frequently, and notify the credit bureau if you find anything suspicious.
A hard inquiry is when a lender checks your CIBIL score during a loan or credit card approval process. Multiple hard inquiries within a short span of time signify your monetary emergency and negatively impact your CIBIL score. Hence, never ever apply for multiple loans at the same time.
Read More:: Benefits of Good Cibil Score
Maintaining a good credit score will help you prove your financial fitness for loan and credit card approvals. Moreover, a good score that is more than 650 will reap other benefits like higher credit limits and lower interest rates. So do TransUnion CIBIL score check regularly to know how creditworthy you are in the eyes of lenders and take steps to maintain or improve your CIBIL score. It is also necessary to keep an eye on the credit report to ensure that your payment details are updated correctly. Be ready with a good CIBIL score to confront any financial emergency in your life.
How frequently should I check my CIBIL score?
Checking at least once or twice a year is advisable if you are usually regular at paying the bills. If you need any new credit product, then it is a good idea to check your CIBIL score to ensure that you are fit for the credit product. If not, you can avoid applying or apply with collateral so that you can stay away from unwanted hard inquiries.
If I frequently check my CIBIL score, will it bring down my score?
Lenders checking your credit score will be considered a hard inquiry, and you checking your credit score will be considered a soft inquiry. Only hard inquiries have a negative impact on your credit score and soft inquiries will have no impact on the score. So you can check as many times as you want.
Why is this month's CIBIL score different from last month's score?
Lenders and banks update their customer credit details frequently, mostly within 30 to 45 days. So, you will have a new score after each update.
Do all banks refer to the CIBIL score for loan approval?
Most banks refer to the credit score of any one of the credit bureaus. Many banks and financial institutions consider the credit score by CIBIL to evaluate the creditworthiness of the borrowers.
How long will it take to build my credit score?
The credit score calculation takes into account various factors, and the factors have different weights. Hence, the time taken to build your credit score depends on the steps you take to repair the score and your current score. You cannot build your score overnight. It will take months to increase your score.
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