Credit score is a three-digit numeral ranging between 300 to 900. It is based on borrower’s credit history, nature of debt repayment, the total level of debts and some other factors. There are mainly four credit bureaus functioning in India. Among these, the CIBIL (Credit Information Bureau (India) Limited) prepares the credit scores.
Most banks prefer a high credit score around 750 and above for extending credit.
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CIBIL and its Product Offering
CIBIL is one of the premier credit information companies in India. The bureau is involved in maintaining all (business and individual) the records related to the credit and loans. Most of the functions of this oldest credit rating agency are based on the guidelines of RBI.
In 2000, it allied with the US TransUnion and is now known as CIBIL TransUnion Ltd.
Individually, the CIBIL doesn’t partake in any lending decisions. Registered banks and other financial institutions submit their data periodically to the CIBIL. This helps the agency to prepare the credit scores and credit reports of companies and individuals.
Steps to Check Your Credit Scores
For securing any form of credit, you have to know your credit scores. We are providing a simple step by step guide that will help you to know your scores easily. This is how you should proceed to check the credit scores.
- Step1: Visit the official website of CIBIL.
- Step 2: Fill in some necessary information. This will include details like your name, contact number, address, email id, etc.
- Step 3: Share additional details like your PAN card number. Just make sure you provide the correct number to proceed to the next step.
- Step 4: Provide accurate information related to your credit cards and loans.
Based on the information furnished, the credit score will be calculated.
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Factors Affecting Your Credit Scores
An impressive credit score is ideal for procuring a loan in an emergency situation or getting credit cards at your disposal. A bad score and report will damage your credibility for approving a loan. Let’s have a glimpse at some of the factors that affect your credit scores.
Repayment Track Record: Your nature of repaying the debts is easily traceable from the repayment track record. If there are frequent late repayments and EMI defaults, it will hamper your credit scores. Therefore, it is advised to timely pay all your bills and EMIs to avoid a negative impact on the score. This score will tell the loan providers whether you can repay the debt burdens from your loan obligations.
Loan Portfolio Mix: You need to maintain a balance in the loan portfolio – a mix of both secured and unsecured loans. If you have too many unsecured loans like credit cards and personal loans, it will affect your credit score. To strike a balance, always aim to have a few secured loans. Loans like home loan or auto loan can positively affect the CIBIL scores.
Credit Utilisation Ratio: It is the ratio of amount of credit you are using against the total amount of credit empowered. According to the financial experts, individuals expecting a decent credit score should keep the ratio somewhere between 25-30%.
Miscellaneous Constraints: A rise in your debt burden is an alarm bell for damaging your credit scores. The large number of credit cards and loans are the major contributors. Another reason can be the pipeline of loan applications under your name in different banks.
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Q. How can I check my credit scores for free?
You are entitled to check your credit scores for free after every 12 months. All you need to do is contact credit rating agencies of India. You can also obtain credit scores from other financial third party platforms.
Q. What is a Good CIBIL or credit score?
A good CIBIL or credit scores ranges between 700 and 900. This will help you to get quick loan approvals, better interest rates, longer repayment tenure, a higher amount of loan sanction and much more.
Q. What is a CIBIL report?
A CIBIL report is a comprehensive report having the credit summary with credit scores, personal information, employment status, loan account information, contact and other relevant details.
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