You will need to know your CIBIL Score if you are looking for a loan or a credit card. Here, your CIBIL Score indicates your repayment abilities during your application process.
What is a CIBIL Score?
Your CIBIL Score is a three-digit number ranging from 300 to 900 that shows your ability to repay a loan. A high score can help you get loans faster and at better rates. Most banks and non-banks need a minimum credit score of 750 for your loan approval.
Who creates your CIBIL Score?
TransUnion CIBIL is one of India's leading credit information companies. CIBIL gets your credit information from banks, non-bank financial companies, and other financial institutions. This information includes your existing loan details, credit card details, and more. Based on this information, CIBIL gives you a credit score and maintains a Credit Information Report (CIR).
When does TransUnion CIBIL create your credit score?
Your CIBIL Score gets generated whenever there is an activity in your credit profile. Some of the activities include:
- Request for a loan
- Pay your EMI or fail to pay your EMI
- Apply for a credit card
- Pay or do not pay your credit card dues
- Use the maximum limit on your credit card
- Use your overdraft facility with the bank
Where can I check my CIBIL Score?
Here is an easy way to check your CIBIL Score in 2 minutes:
- Click on the ‘Check your CIBIL Score for free’ button on this page
- Enter your basic details including your name, employment type, and PAN
- Submit a few more details such as your date of birth and net monthly salary
- Enter your 10-digit mobile number and verify the OTP
Once you complete this, you will see your CIBIL Score displayed on the screen.
That’s not all. You can get a detailed analysis of your loans, repayments, and more with the Credit Health Report (CHR).
Check your CIBIL Score for free
What is a Credit Health Report (CHR)?
Your CHR offers a detailed overview of the following:
- Credit score
- Account summary
- Missed or delayed EMIs
- Tips to improve your financial health
- Personalised offers on loans, credit cards and more
How credit scores work?
A credit score is a numerical representation of your creditworthiness. It is calculated based on information from your credit report, which includes details about your borrowing history, repayment behaviour, and current debt levels. Lenders use credit scores to assess the risk associated with lending you money. A higher credit score generally indicates a lower risk, making you more likely to qualify for loans with favourable terms.
How your credit score is calculated?
Credit scores are calculated using a complex algorithm that considers several factors. These typically include:
- Payment history: This is the most significant factor, accounting for a large portion of your credit score. It reflects your consistency in making timely payments on your loans and credit cards.
- Credit utilisation: This refers to the amount of credit you're using relative to your available credit. A high credit utilization ratio can negatively impact your score.
- Credit history length: A longer credit history generally indicates a more stable financial profile.
- Credit mix: Having a variety of credit accounts (credit cards, loans, etc.) can positively influence your credit score.
- New credit: Applying for multiple credit accounts within a short period can temporarily lower your score.
How to improve your credit score?
Improving your credit score takes time and discipline. Here are some effective strategies:
- Make on-time payments: Consistent and timely payments are crucial for building a strong credit history.
- Reduce credit utilisation: Aim to keep your credit card balances low compared to your credit limits.
- Limit new credit applications: Avoid applying for multiple credit cards or loans simultaneously.
- Dispute errors: Review your credit report regularly and dispute any inaccuracies.
- Consider a secured credit card: This can help build credit if you have a limited credit history.
What is a good credit score to have?
Credit scores typically range from 300 to 900, with higher scores indicating better creditworthiness. While there's no universally accepted definition of a "good" credit score, a score above 750 is generally considered excellent. However, lenders may have different criteria, so it's essential to check their specific requirements.
Who calculates credit scores?
Credit scores in India are calculated by credit bureaus such as CIBIL, Experian, Equifax, and CRIF High Mark. These bureaus collect and maintain credit information from lenders and provide credit reports and scores to consumers and businesses.
How can I raise my credit score quickly?
While there's no guaranteed way to rapidly increase your credit score, certain steps can help accelerate the process:
- Pay off outstanding debts: Reducing your overall debt can positively impact your credit utilisation ratio.
- Negotiate with creditors: If you're struggling to make payments, contact your creditors to discuss potential payment arrangements or debt settlement options.
- Become an authorised user: You may be able to benefit from a primary account holder's positive credit history by becoming an authorised user on their credit card.
Why having a good credit score is important?
A good credit score opens doors to various financial opportunities. It can help you:
- Qualify for loans with lower interest rates
- Secure credit cards with better rewards
- Rent apartments or houses more easily
- Obtain favourable insurance premiums
What to do if you don't have a credit score?
Building a credit history from scratch requires patience and responsible financial behaviour. Consider these steps:
- Obtain a secured credit card: This can help establish a credit history.
- Use credit responsibly: Make timely payments and keep your credit utilisation low.
- Consider authorised user status: As mentioned earlier, becoming an authorized user on a trusted person's credit card can help build your credit.
Why does your credit score change?
Your credit score can fluctuate due to various factors, including:
- Payment history: Late or missed payments can negatively impact your score.
- Credit utilisation: Changes in your credit card balances can affect your credit utilisation ratio.
- New credit: Applying for and opening new credit accounts can temporarily lower your score.
- Credit mix: Adding or closing different types of credit accounts can influence your credit mix.
- Credit report errors: Inaccurate information on your credit report can affect your score.
Monitor your credit report and score
Regularly monitoring your credit report and score is essential for maintaining good financial health. You can obtain your credit report from credit bureaus and use credit monitoring services to track your score. This helps you identify any errors or suspicious activity and take necessary steps to protect your credit.
