CIBIL is fully known as Credit Information Bureau (India) Limited.
CIBIL Score, If you go to take a loan, Whether it is a personal loan, credit card loan, car loan, home loan Or any other type of credit facility from the bank. Then bank checks your CIBIL score, I have mentioned the CIBIL score many times in my previous Blogs.
So, in this Blog, we will learn about the CIBIL score, I’ll do a short series, I will make 3 to 4 Blogs about the CIBIL score, in this particular Blog, what is the CIBIL score? How does it work? What is the meaning of this? What is a low score? What is a high score? We will understand these things, so read the Blog from start till the end, so that you’ll not miss any important point, And you’ll understand the whole concept of the CIBIL score properly.
Let’s understand the concept of the CIBIL score.
Let’s take an example. Importance of CIBIL Score, assume he is Rupesh, and he has the requirement of loan or credit card, He goes to the bank. Now maybe he requires a home loan or car loan, both of these are secured loan, or maybe he requires an unsecured loan, Like credit card or a personal loan or any other type of credit facility, he wants from the bank. So the bank will say, I do not trust you, Whether you will pay us on time or not, Bank will go to the CIBIL, Which is an organization, Which maintains all the data and information of all the individuals and businesses. Maintains their credit history, based on that, they assign a CIBIL score.
So, the bank says that tell me the CIBIL score of Rupesh, so what’s happening here is that the bank wants to check the credit worthiness of Rupesh, before giving the loan, why do they want to do this? They want to do it to know the repayment history of Rupesh, What type of pattern did he follow in the past? So, you will know that by CIBIL score.
What is the CIBIL score? It is a 3-digit credit score assigned, what is CIBIL Score? To an individual and businesses, we get to know your credit worthiness by this, and what is your risk potential, this means if you are a risky customer for the bank, Then the bank gets to know that too, if your score is very low,
Then the bank will think that you will not repay the loan to the bank on time.
So, the risk for the bank increases, so basically, banks do the assessment, if we talk in simple language, Whoever the individual to whom the bank lends money, will pay back on time or not? So, this indicates the CIBIL score.
So, what is the range of the CIBIL score? The range is from 300 to 900, Range of CIBIL Score, 900 is the maximum, the higher the CIBIL score is, the greater is the benefit, All the financial institution. Shares their credit data with CIBIL, so this is one bank, and it gives the loan to the customers. The bank will share all the data with the CIBIL, In the same way, if we talk about bank 2, bank 3, All the banks in the world, world means I am talking about India. All the banks in India share their data of customers with CIBIL. So that they will know how many loans this customer has taken? How many credit cards has he taken? What is their repayment history? All this data can be accessed by the bank from the CIBIL website.
The parent company of CIBIL is Trans Union CIBIL, if we talk about today’s date. Then it maintains the data of more than 600 million individuals, and it maintains the data of more than 32 million businesses in India.
So, let’s understand how does the CIBIL score look like? What type of score do you get when you go to the website? And what does that mean?
See this, I got my CIBIL score from the website, we can get it for free. I will tell you that how can we access this in the next Blog See, different percentages are also assigned, Which comes in the range of 300 to 700, They are bottom 20% people, bottom 19% people, 21% comes in the range of 700 to 774, In the range of 775 to 799, 21% people come in this range, In the range of 800 to 824, 20% people come, in this range 19% people come in the range of 825 to 899, I think my CIBIL score is quite good Any bank can give me a credit card or loan easily.
It’s not a very big task to maintain a good CIBIL score, anyone can do it as long, as you pay your EMI and credit card payments on time, then it can be maintained very easily.
On what factors does the CIBIL score depend?
First is how is your repayment history? As I have told you, if you do your payments on time of your EMI, credit card payments, etc.
Second, how is CIBIL Score Calculated? How is your credit card utilization? So, the better the repayment history is, the better will be the CIBIL score.
Third, Credit utilization means that whether or not you have a habit of taking very much loan, if you have a habit of taking very many loans, then your CIBIL score can be less, so you should keep your credit utilization a little bit low. You should keep it at a moderate range, Multiple enquiries imply, if you generate much inquiry for the loan requirement, assume you are thinking of taking many loans at the same time, If you are generating many enquiries, Then it can affect your CIBIL score, You should try that your inquiries should be minimum. Do as much as you require.
The fourth is the credit mix. Credit mix means if you are taking a car loan, You are taking a personal loan, credit card, home loan, if you have taken different types of loans then it is considered good. If your credit mix is good, then your CIBIL score will also be high.
I will write about all these factors in detail, that how can you improve your CIBIL score, I will make a separate Blog on this, and you can read that Blog of mine.
How do High and Low CIBIL Scores affect us?
So, what is the benefit of maintaining a good CIBIL score? A good CIBIL score means you will get affordable loans, you will get the best interest rates, suppose if the lowest rate of home loan is 8.5 %, Then if your CIBIL score is good let’s stay it’s above 750, Then you will get the lowest home loan rate, But if it goes below 800 or 750, Then your interest rate can increase, You may not get approval very easily, So lower CIBIL score means that, You will not get approval very easily and You can get rejected also, We are talking about these scores below 700, Then it is very difficult to get a loan here, And the score above 750 is considered a good score.
What is a Good Score?
If we talk and your score is in this range, if you are in the top 60 % of people, Then you can get a loan quite easily, so if you don’t have any activity, and you haven’t generated a CIBIL score.
NA (Not Applicable) in CIBIL means ?
Then you can get NA, NA means that you will not get a score instead you will get NA, This means there is no credit activity, You haven’t used a credit card, you haven’t taken a loan, In the last couple of years, And second, you can see something like NH, NH means No Credit History, No credit history means either you haven’t used any credit system, You haven’t taken any loan, you haven’t used any credit card, or maybe your credit history is not enough ,to generate a score, So if you see NA or NH in your score, Then no need to panic, You can start by taking a small loan, Then your credit history will be made again.
I think I’ve covered all the basic things related to the CIBIL score, In the next Blog, we will see how can you check your CIBIL score free of cost, how can you generate this type of report for yourself? If you liked the Blog, then share this Blog with your friends and family members. So that they also will get the benefit from this Blog, if you have any suggestions or feedback. Regarding the Blog or the Website then you can comment it below. You can suggest the topics also for the future Blogs. I read your comments daily so tell me by commenting on what topics should I cover?
