CIBIL Score Check: Everything You Need to Know

The credit score is a 3-digit numeric representation of an individual's credit history and credit risk. The number showcases how well one was able to manage their credit products, including home loans, personal loans, business loans, credit cards, credit lines and overdrafts, among others from banks/NBFCs/financial institutions. 

The CIBIL score is calculated on the basis of the consumer's credit details that are provided to credit bureaus monthly, by the respective lenders. This blog shall discuss how CIBIL score check can be conducted online, its importance, and other details.

CIBIL Full Form and its Brief Overview

The credit score is also commonly referred to as the CIBIL score. CIBIL expands to Credit Information Bureau India Limited. This entity is a credit information company which engages in the record maintenance of credit-related activities undertaken by individuals/organisations. 

Financial institutions like banks, non-banking finance companies, and others submit the customers' credit details to the authorised bureau. On the basis of this information, CIBIL provides the CIR (Credit Information Report) and allows you to find CIBIL score details online.

What is a Credit Score and Why is it Important?

The credit score is taken into consideration by lending institutions for them to decide whether or not a credit product applicant is a reliable borrower. A credit score reflects the level of risk a borrower poses to lenders, indicating whether they are a low-risk or high-risk applicant. It serves as a key indicator of the borrower’s likelihood to repay a new loan on time.

Whenever one applies for a type of loan/credit card, the lending institution requests a credit report check. The credit bureau provides the same and the former entity is able to trace the applicant’s repayment capabilities and judge their overall creditworthiness.

The CIBIL score ranges between 300 and 900. The higher the applicant’s credit score, the more likely they will get approval for new credit products. A credit score of 750 or more is generally considered the standard benchmark and is preferred by financial institutions for loan/credit card approvals. However, certain banks and NBFCs do consider a credit score of 700+ for credit card approvals.

Keep in mind that frequently missing or delaying loan EMI or credit card bill payments can negatively affect your credit score. However, if you are disciplined with your repayments of credit card bills and EMIs, your credit score shall reflect stable behaviour. Avoiding frequent applications for credit shall also help boost the credit score.

What is considered to be a Good CIBIL Score?

A CIBIL score of 750 or more is considered to be good by most lending institutions. Therefore, maintaining a CIBIL score of 750 or above (ideally as close to 900 as possible) can significantly increase your chances of getting approved for a loan or credit card of your choice.

Experts recommend regular CIBIL score checks, as it can fluctuate over time. So, here is your answer to, “Why should I check my CIBIL score often?” It is the best way to stay updated on your credit health and spot any report errors/identity thefts/potential fraud in time.

What are the Benefits of Having a Good CIBIL Score?

The CIBIL score is one of the very first things that the lending institution/NBFC shall check while evaluating your application for a loan/credit card. If your CIBIL score is low, you must take the initiative to try and improve it at the earliest. Otherwise, the lending institution will reject the loan/credit card application at once.

However, if your CIBIL score is high, your chosen lending institution will proceed to look into the other details. The overall understanding of your credit report will help them determine your creditworthiness as well as repayment capacity. A good credit score helps you get through the first step of evaluation, increasing the chances of the loan application getting approved.

Keep in mind that your credit score will not be the sole factor to be considered in determining whether or not you qualify for a new credit product. Institutions will also consider your debt-to-income ratio, income, profession, history of employment, and repayment capacity, among other factors. Only after considering all the factors will they approve/reject the loan/credit card request.

A high CIBIL score will help you access credit products, and reduce your interest outgo for specific loans. Several banks and NBFCs offer preferential low interest rates to particular applicants who have good credit scores and stable repayment histories to back their credibility.

How to Check Your CIBIL Score?

Here is a step-by-step guide on how to check your CIBIL score online:

Step 1: Visit the official website of CIBIL.

Step 2: Log in to your existing account. If you do not have an account already, register by creating a new account.

Step 3: Fill out the form with appropriate details including your name, ID, email ID, date of birth etc.  

Step 4: Proceed to submit.

Step 5: Wait for your free credit report to be generated. Upon verification, you will get the free annual credit report document sent over to your registered email ID.

This way, you can check the CIBIL score free in a matter of minutes.

Credit Score Ranges and What They Imply

The list below specifies the CIBIL score ranges. Lending institutions typically consider these ranges while determining whether or not certain credit applications should be approved:

Factors that Impact CIBIL Score

Here are the primary factors that impact the CIBIL score of an individual: 

Loan Repayment Record : Paying on time can significantly boost your CIBIL score. Missing out or delaying the pending EMIs or meeting repayments post-deadline, will negatively affect the CIBIL score.

Credit History Duration: Your credit history age or duration may affect your CIBIL score to a certain degree. If you consistently used credit cards or loans for an extended period and have made sure to make timely repayments on them, this upholds the best-case scenario for lenders. It is a sign of disciplined and stable credit behaviour. Therefore, it has an impact on the CIBIL scores.

High Volume of Hard Inquiries: Upon applying for a brand new credit product each time, the lending institution inquires about the applicant's CIBIL score. These inquiries by the lenders/financial institutions are termed hard inquiries. 

A high number of such hard inquiries negatively impacts your CIBIL score as it portrays credit-hungry behaviour. But when an individual checks/downloads their credit report, it is considered to be a soft inquiry which has no impact on the CIBIL score.

Credit Utilisation Ratio: The Credit Utilisation Ratio or CUR, is the portion of credit you have used from your total approved credit limit. The preferred CUR is 30% or less of the available credit limit. A higher CUR hardly has an effect on the CIBIL score as long as one pays their credit card bill on time. However, maxing out the credit card limit is also not recommended as it indicates a high level of dependency on credit. This may negatively affect the CIBIL score.

A Credit Mix: If you take out different kinds of loans including home loans, personal or auto loans and have paid them back on time, this indicates the ability to handle various credit types. 

It is important to create a mix of credit over time as it can have a positive impact on the CIBIL profile. On the other hand, if you have taken too many unsecured loans, it displays credit-hungry behaviour and excessive dependency on credit and it will hurt the CIBIL score.

However, the impact will not necessarily be too significant if the repayment record is maintained with discipline.

How to Improve CIBIL Score?

As a poor CIBIL score can complicate the entire process of getting approved for credit products, the best course of action would be to work on improving the score. Here are some simple steps you can undertake to improve the CIBIL score:

• Repay EMIs and Credit Bills on Time: This is the best, tried and tested way to improve your CIBIL score. Prioritise repaying loan EMIs and credit card bills in a timely manner. Avoid missing out on any repayments no matter the circumstances.
• Control Credit Dependency: Try to cut down on excessive dependency on credit as it portrays credit-hungry behaviour. Further, reduce the credit utilisation ratio to 30% or below. If you are used to maxing out your credit card limit often, this point is crucial.
• Rectify Credit Report Errors: If you happen to track down any errors in your credit reports, make sure to get them rectified by the credit bureau at the earliest. A regular CIBIL score check shall help you stay updated on potential errors in the credit reports.
• Avoid Multiple Loan/Credit Card Applications at Once: Make sure to avoid applying for several loans/credit cards at the same time. Wait it out for at least 6 months to apply for the latest credit.
• Do Not Close Off Your Oldest Credit Card: An extensive credit history allows lending institutions to make better credit-related decisions with regard to the applicant.
• Maintain a Mix of Credit but Do Not Overdo It: Maintaining a proper mix of secured (car loan, home loan, etc.) as well as unsecured credit ( credit card, personal loan, and others), can help improve your CIBIL score.
• Seek Advice from Experts: Opt for Credit Advisory Services and consult with field experts. They will help you improve your credit score with ease and clarity. 

Conclusion

Regular CIBIL score checks are essential to maintain a healthy financial profile. This includes monitoring the CIBIL score to identify any potential areas of improvement, detect possible errors/discrepancies, and initiate corrective action to enhance overall creditworthiness. A high CIBIL score opens up several doors to better loan options with lower interest rates and boosted financial flexibility. 

By actively taking control of the CIBIL score, you can unlock a bright financial future ahead and achieve long-term goals. Another way to achieve the same is through investments in Fixed Deposits.
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