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What is CIBIL & Importance of CIBIL Score

 

A good credit score is one of the most important eligibility criteria based on which a bank gives you a loan. Your credit score, which the Banks check through CIBIL, is a precise indicator of your credit history which reflects factors like: –

  • Record of late payments and defaults.
  • Loans and credit cards that you currently hold.
  • Diligence towards paying loans and credit card bills.
  • Number of loan and credit card applications submitted by you.

Diligence towards repayment and having secured loans like home or auto loans works positively for your CIBIL score. On the other hand, payment defaults and too many loan or credit card applications can have a negative impact on your CIBIL score.

A good CIBIL score helps banks to determine your credit-worthiness and approve loans and credit card applications faster.

 What is CIBIL?

Established as the Credit Information Bureau (INDIA) Limited or CIBIL in August 2000, CIBIL is India’s first Credit Information Company (CIC) and is the central recorder of the credit information of all the borrowers. CIBIL collects and maintains all the record of each particular individual regarding the loans and credit cards and provides the same information to all other financial institutions, so that the banks can be aware of your credit history before approving your loan.

This information is provided to CIBIL by the member banks and finance houses. Every time you borrow a loan or avail a credit card, your credit and repayment information is collected and submitted by the member bank to CIBIL on a monthly basis. This information is collected and recorded to create a Credit Information Report (CIR), which is in turn shared with all the other banks and financial institutions.

The next time you walk into a bank to apply for a loan, your CIR is first verified by the bank, to prevent the bank from providing a bad loan or lending money to borrowers who may not be credit worthy.

Thus, the CIR is your credit score sheet, which the bank verifies before approving your application. CIBIL has played an important role in the Indian financial system, providing efficient information and preventing a bad situation.

What is CIBIL Score?

CIBIL Score is a three-digit numeric summary of your entire credit history. The CIBIL score is derived using the information provided in your Credit Information Report (CIR). The CIBIL score normally ranges between 300 and 900. A higher score indicates a less risky borrower and increases your chances of getting a loan approved.

How does it work?

To approve you a loan, the credit lending organization must gather your credit score and repayment history, which may be spread over at various institutions. CIBIL collects and organizes your data and provides the same to all the banks and financial institutions, which by default are members with CIBIL. The bank uses this collective credit history to determine whether your application should be approved. It helps the bank to function efficiently and in an economical way.

Thus a CIR is a factual report which provides an idea on your credit and payments history. Every time a lender seeks a CIR of an individual from CIBIL, a unique nine digit control number is generated which the CIBIL uses to track an individual’s report from its database. A new control number is generated every time a request is made.

Can you check your CIR?

Every individual has the right to obtain his/her respective Credit Information Report (CIR). It is through this that you can determine your credit scores and standings. CIBIL does not mark you or any individual as a defaulter, but it is just mentions a particular score on your CIR. It is entirely dependent on the respective bank to determine who it considers a defaulter. The CIR credit score or the Trans Union score ranges from 300-900.

You can access a copy of your CIR by applying over the CIBIL website. You can make the payment online as well. You can find out more details at www.cibil.com.

Documents to be required in the process:

  • A CIR request form
  • Identity Proof of the requestor (Voters ID/PAN card/DL/Passport)
  •  Address Proof (Electricity bills/Passport/Bank statements)
  • In case you have cleared off your debts but your CIR has not been updated with CIBIL, all you need to do is to:
  • Log on to the CIBIL website. https://www.cibil.com/
  • Purchase your CIBIL credit report.
  • Identify the error.

Get in touch with CIBIL through the Online Dispute Form to get the error corrected.

Be advised that CIBIL needs the Control Number of a CIR when you are raising a Dispute Resolution request so that it can review your report and make the necessary amendments.

Watch video to learn the importance of CIBIL Score & Credit Information Report.

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