An Overview Of Cibil Credit Report & How To Check It

Knowing your credit score is the first step toward becoming an informed credit user. However, simply knowing your credit score is insufficient. You should also be able to examine and analyse your credit report. This will assist you in discovering and comprehending the variables that are causing your poor credit score, if any. Also, if there are any anomalies in the report, they can be addressed if the person understands their credit report.

How should you read your credit report?

You must be familiar with the components of your CIBIL report to read and understand what is written in it. Check for them in your report and you’ll be able to figure out where your report is pointing.

What exactly is a CIBIL Score?

Credit Information Bureau (India) Limited (now known as TransUnion CIBIL) is a credit information company that keeps track of the credit information of borrowers ranging from corporations to individuals. On a regular basis, they collect pertinent information about the credits given by various financial institutions to their borrowers. The acquired data is subsequently used by the company to compile and issue a credit report as well as helping in credit score checking, commonly referred to as the CIBIL Score.

To put it simply, this number is comparable to the marks acquired by a student, which are entirely based on his performance in previous examinations. With this mark, we can judge the student’s capability in terms of whether he will perform well in future exams. In other words, we can tell if he will ‘Pass’ or ‘Fail’ his future examinations based on this score.

In terms of the financial environment, the student is the borrower; the past exams are the past loans/credits that he has taken; the marks obtained from past borrowing activity are his CIBIL Score; the future exams are his future borrowings; and ‘Pass’ refers to prompt and complete repayment of his borrowing while ‘Fail’ refers to the borrower’s failure to repay the credit that he has taken.

Because CIBIL stands for the name of the credit bureau that generates the score, your credit score is frequently referred to as your CIBIL score. The Credit Information Bureau (India) Limited was formerly known as CIBIL. It merged with US-based TransUnion in 2000, and the company is now known as TransUnion CIBIL Ltd. The CIBIL Score, which varies from 300 to 900, is a three-digit numerical summary of your credit history, rating, and report. The higher your credit score, the better your credit rating. An excellent CIBIL score is one that ranges between 700 and 900 and demonstrates to the lender your creditworthiness.

Why and for whom should a CIBIL Score be obtained?

Any person or business seeking credit or borrowing from a financial institution, such as a home loan, personal loan, credit card, or other, will be evaluated based on their CIBIL Score. However, for a new credit client (someone who has never borrowed money from a financial institution before), a CIBIL score will not be available and may not be necessary.

The CIBIL score is a measurement of the borrower’s future ability to repay the borrowed funds. Borrower’s previous borrowings, promptness in repayment, income data, and so on are viewed as indicators of his future actions about dues payback. The higher the credit score, the more likely the credit application will be approved. The score goes from 300 to 900, with a number below 750/700 making it difficult to secure credit, and anything above 750 giving the borrower a reasonable chance of obtaining credit. In some situations, a better CIBIL score may also allow the borrower to receive credit at a lower interest rate than the standard interest rate.

Read also: A Comprehensive Guide To Credit Score

How to keep a good CIBIL score

A good CIBIL score always ensures faster and easier credit application acceptance and, in some situations, allows for credit at cheaper interest rates. But how can a borrower make sure he gets a decent CIBIL score?

Maintain reasonable/low credit usage: 

Just because you have a greater credit limit doesn’t mean you can borrow more unless you spend it all up or exceed it. Plan your costs carefully and ensure that your credit limit is used for important purposes while remaining reasonable, especially within the limit.

Prompt repayment of loan instalments:

Whether it is a housing loan, a personal loan, credit card debt, or any type of borrowing, prompt repayment of instalments is always beneficial in obtaining a good CIBIL Score. When it comes to issues like credit card dues, ensure you settle the payment fully and not simply pay the ‘minimum amount due’.

Regularly review your borrowings: 

Regularly reviewing your CIBIL score and credit record may assist you in ensuring that there are no anomalies in your CIBIL score. If you discover an issue with your borrowings, CIBIL score, or other facts in your credit report, you should contact the appropriate authority as soon as possible to avoid further complications.

A good blend of unsecured and secured loans: 

Credit card debt, personal loans, and other unsecured loans are common (that is, the borrower does not pledge any asset to borrow). As a result, having too many unsecured loans may be detrimental. As a result, having an appropriate mix of secured loans, such as a house loan, vehicle loan, and so on, where an asset is pledged against the loan, is also beneficial for attaining a decent CIBIL score.