What is CIBIL?
Credit Information Bureau of India Limited widely known as CIBIL, it is one of the first credit rating agency in India. CIBIL collects information of borrowers from banks and financial institutions and gives them a 3 digit score based on their previous credit history.
Key indicators that decide credit score:
• Repayment History
• Too Many Applications for Loans or Credit Cards
• Maximum utilization of limits in Credit cards
• More existing Loans and Credit cards (Banks will consider till 2/3 of individuals salary)
• If the borrower is taking more unsecured loans than secured loans.
CIBIL provides its score from 300-900, though banks prefer more than 750 score to approve loans and other financial benefits. It doesn’t mean the people with low credit score will not get loans. Different banks have different approaches while considering this score.
Your CIBIL TransUnion Score ranges between 300 and 900. 79% of loans are approved for individuals with a CIBIL Score greater than 750. Higher your CIBIL TransUnion Score, higher are your chances of Loan Approval. Source
300-550: It is considered as very low credit score and many banks will reject loans and individuals need to improve their score by repaying any pending loans and debts to banks.
550-700: this score is considered as marginal and some banks will consider as risk and most individuals will get a loan at a higher rate of interest and need to improve credit score by repaying band loans.
700-750: It is considered a good score and banks will provide loans and credit cards at a good rate of interest.
750-900: Excellent Score and almost all banks are available to provide loans and interest rates are very competitive when compared to all above categories.
Indicators that reduce Score:
- Late repayments of Car or Personal Loans
- No paying Credit card Bills on Time
- Number of applications that are submitted or rejected
Indicators the boost Score:
- Regular repayments without delay
- Banks will consider existing loans and credit card.
There are few factors where CIBIL score is not depending on individual’s how much they are Savings what education they have, how much they are earning, gender and the caste or race they belong to. From Feb 2018 Indian government is integrating Aadhar card to all banks and PAN cards. It is advised to update Aadhar card to respective banks and PAN card for uninterrupted services from banks.
Individuals can obtain their credit score by registering and paying a fee of Rs. 550 for one report here