Monday, June 21, 2021

WHAT IS CIBIL SCORE AND CIBIL REPORT?

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The Credit Information Bureau India Limited, also known as CIBIL Transunion, is one of the four  Credit Bureaus in India that gathers and saves your credit information. CIBIL  receives all the information of customers related to loans and credit from lending institutions including  Banks and NBFCs.

The CIBIL uses provided by lending institutions and Banks of customers to calculate  CIBIL score and a clear credit report. Banks, NBFCs, and lending institutions request a credit report before sanctioning loan loans to customers. This credit report also helps customers to maintain a good credit score.

Now let us discuss the credit score and credit report in detail.

Credit score

Your CIBIL score signifies your creditworthiness. It is a numeric value, varying from 300 to 900.

The CIBIL score carries a very significant role during the loan approval procedure. Using the score, the lender classifies the risk scale of the person. And then decides whether to sanction the loan or not.

The financial institution provides the client’s loan and credit-related information to the credit bureaus. The information includes your credit card bills, repayment records, previous loans, your EMIs payment, and any default in payment. CIBIL applies scientific methods by considering all the information to introduce the relevant credit score of that client.

A Credit Score that is above 750 is a healthy CIBIL score in general. However, a lesser score does not signify that you are not suitable for loans. The higher the CIBIL score of a customer, the lower will be the interest rate. Hence, a good CIBIL score makes it easier for clients to get their loans at a reasonable interest rate.

One should check the CIBIL score more regularly to check the status of the CIBIL Score and Credit Health.

CIBIL like the other three  Credit Bureaus provides your CIBIL score and CIBIL Report once a year for free of cost.

CREDIT REPORT

A credit report is a complete documentation of a client’s appropriate information. It is generally known as a CIBIL report. Credit reports include the following details.

  • Personal information of a candidate (Name, Age, DOB, Gender, and Address)
  • Professional details and earnings.
  • Number of queries made by potential lenders on receipt of the loan application
  • Any EMIs payment default.
  • Any defaults in the loan.
  • Reports of past and current credits with the payment record.
  • The details of paid loans, if any
  • Credit limit & monthly expenses
  • Credit Score

This report provides specific information to lenders about the client’s creditworthiness depending on past and current credit activities. With the help of the report, lenders decide to grant a loan.

Importance of Credit Reports for Businesses

The credit reports for businesses contribute information relating to the establishment, directors, number of employees working, profit and loss, liability, annual turnover, fixed assets, pending court cases if have any.

CIBIL Score versus CIBIL Report

  • CIBIL Score is a 3-digit numeric value that summarizes your CIBIL Report and reveals your creditworthiness depending on your credit records and payment behavior.         
  •  CIBIL Report is a complete document describing your credit profile that incorporates your personal information, credit card information, and inquiry information.
  • CIBIL Score is calculated with your credit behavior of the last 36 months. Whereas, CIBIL Report includes the credit history of the credit taken in the past by a customer.
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