Cibil score in India: Everything you need to know

What is CIBIL score?

A CIBIL score is a credit discipline indicator offered by the Credit Information Bureau, India Limited. Your credit score is a composite of several criteria, including –

  • History of credit repayment
  • Accounts 
  • Total sum owed
  • Credit terms
  • Credit utilisation ratio

Your CIBIL score assists lenders in determining your eligibility for loans or credit cards. It is one of the most trusted agencies to analyse a borrower’s creditworthiness in India. Furthermore, it is a number ranging from 300 to 900 known as the score, which is a sum of your credit behaviour. The higher your score, the better your chances of loan acceptance at reduced interest rates.

This score also has a significant impact on your ability to obtain credit cards, as it is your lender’s first impression of you. If your credit scores are low, the lender will look at other papers such as your salary, tax payment, debt to income ratio, and employment history. This would take more time. You will also need more convincing to get your credit accepted, and you will not have a hassle-free experience.

To have a better understanding of your scores, perform a quick online CIBIL score check. This will assist you in locating your whole credit history, which will improve your comprehension of where you stand. The CIBIL rating is vital for a smooth financial path, and here’s why:

  • Negotiation power — With a strong score, it will be simpler to negotiate the loan terms with the lender to your liking. 
  • Easy acceptance –A strong score will increase lenders’ belief in your repayment discipline, resulting in a greater and faster approval rate on all of your applications. 
  • Increased credit repayment tenure –A longer credit repayment tenure allows you to pay off your loan in instalments and at a slower rate, reducing your financial stress significantly.
  • Cheaper interest rates – One of the most significant advantages of maintaining a good credit score is that you will be able to obtain a loan at a lower interest rate from the lender, so decreasing your financial burden. 
  • Simple access to pre-approved loans- A very high score implies a clean credit history online, which makes it easier to receive pre-approved loans.
  • Easy acceptance of bigger credit amounts – A good credit score will help you receive a higher amount of credit faster, and lenders will see less risk in offering you a loan.
  • Reduction in processing fees and charges – A high score will also result in the elimination of otherwise burdensome processing fees and costs.
  • Increased credit repayment tenure –A longer credit repayment tenure allows you to pay off your loan in instalments and at a slower pace, reducing your financial load to a considerable extent because you are not in a rush to repay your obligations.

Examine your CIBIL score

  • You may now check your CIBIL score online in the blink of an eye.
  • For online CIBIL checks, go to “https://www.cibil.com/.”
  • Click on ‘Get your CIBIL score’ in the upper right corner.
  • Create an account by entering your personal information such as name, DOB, e-mail, phone number, pin code, and a valid ID such as a PAN card, driving licence, Aadhar card, or passport.
  • Following the creation of the CIBIL account, a payment must be made for the duration of your choosing. This will help you to keep track of your scores on a frequent basis.
  • Following this procedure, a verification email will be issued to your account to confirm your information.
  • Your CIBIL rating will be generated once the verification is complete.
  • You may also check your CIBIL score for free online using specialised credit card payment portals.

CIBIL score for various loans:

  1. Personal loan CIBIL score

A personal loan is an unsecured loan that does not require collateral. As a result, it is approved only after a thorough examination of your CIBIL score. To qualify for a personal loan, an applicant must have a practise score of 750 or higher.

Individuals who do not meet the score standards might apply for a lower-interest loan or ask a close family member with a good score to act as a guarantor.

  1. CIBIL score for mortgages

For home loans, a CIBIL score of 750 or more is required. However, because home loans are secured, some lenders may accept an application even if the credit score is slightly lower. If you have an excellent credit score, you can borrow up to 85% of the cost of your home. Remember that having a good credit history will help you secure a mortgage faster.

  1. CIBIL score for commercial loans

Because business loans are often for a larger sum, there is a significant level of risk involved. As a result, a high CIBIL score is essential in the procedure. A good credit score might help you get good business loans with low interest rates.

Increasing your CIBIL score

An optimum score is always above 750, but anything above 700 is considered good and can have a positive impact on your loan acceptance. A credit score of less than 600 is regarded dangerous in terms of obtaining your credit demand approved. Having stated that, different types of loans would have slightly varied recommended CIBIL scores. Furthermore, if you are an applicant, you should be aware that lenders prefer a higher credit score for unsecured loans than for secured loans.

Don’t get too worked up if you don’t get a high score. Avoid stress by following these simple steps to boost your score.