CIBIL SCORE and CIBIL REPORT

You are aware, every financial institution be it a public sector bank or a private sector bank
would like to increase its share in Retail advances for various reasons such as:
a) A healthy spread in the interest rate.
b) Small ticket advance,
c) Chances of account slipping is very low since due importance is given for the future cash flow
while sanctioning the loan.
d) Adequate security and also margin.
e) Chances of cross selling the products are more.
In order to take a decision whether to lend or not, banks would be collecting all the
information/documents such as party's existing income/ KYC documents etc., from the
prospective borrower. However at times it is very difficult to get the authentic information about
the party's past dealings and also his repayment history of fulfilling past commitment which is
provided by scanning into party's CIBIL report.
Now lets discuss the importance of accessing into CIBIL information before granting a loan to
customers especially retail as well as SME customers.
CIBIL, which stands for Credit Information Bureau (India) Limited, is an ISO 27001:2005
company. A first of its kind, it is Indias premier Credit Information Company (CIC). Founded in
the year 2000, it has established itself as a key participant of the Indian financial system. The
company records credit related information of individuals as submitted by registered member
institutions. CIBIL works in association with TransUnion International Inc. and Dun and
Bradstreet.
CIBIL has two major segments viz. the Consumer Bureau and the Commercial Bureau. The
Consumer Bureau maintains credit records of individuals while the Commercial Bureau
maintains credit records of institutions/companies.
The Credit Information Bureau (India) Ltd, better known as CIBIL, is the premier agency for
providing credit reports and scores pertaining to individuals. CIBIL sources financial data of
individuals such as loan and credit card information from leading banks and other financial
institutions in India. This data is then presented in the form of a CIBIL credit report, also known
as a Credit Information Report (CIR).
Analyzing your CIBIL score
Score of -1: This implies that the borrower has no previous history of borrowings with any bank
or other financial institutions in the country i.e. No credit history.
Score of -0: This implies that the borrower has less than 6 months history of borrowings with
any bank or other financial institutions in the country.

Score from: 300-600: Individuals with CIBIL credit scores in this slab are considered to be a
credit risk by banks and other financial institutions. In general, credit cards and loans will not be
provided to people in this slab.
Score from: 601-750: This is the intermediate range of scores and will allow you to borrow from
various lenders. However, banks may refer to your overall financial position and consider other
risk related criteria to ascertain your creditworthiness. e.g. stable employment, different sources
of income, loan security etc.
Score in excess of 750+: Scores above 750 are considered to be good and will help you in
getting loan or a credit card with ease. If your credit score is high, you can leverage this to
negotiate with lenders for better/lower interest rates.
Why should you get your credit information report?
It helps in analyzing your true financial standing and make plans for future finances.
You can be on top of your borrowings and avoid debt traps.
With a CIBIL score in hand, you are in a great position to make decisions regarding availing
new forms of credit, while also being able to extract the best possible rates from banks or
other lenders.
It helps in cultivating financial discipline.
Things that positively affect your credit score
On time loan EMI payments.
Regular payment of credit card bills.
Paying credit card bills in full rather than paying minimum due amount every time.
Avoiding over-leveraging.
Maintaining strong financial records.
Too many forms of credit (such as unsecured personal loans) among family members.
Proper utilization of approved credit limit.
Ensuring banks and other financial institutions youre dealing with record and submit positive
information to CIBIL.
Requesting and maintaining a copy personally rather than through financial institutions.

Things that negatively affect your credit score

Too many credit report enquiries by banks and other institutions.

Cheque bounces/dishonors.
Irregular loan repayments.
Defaulting on credit card bills/ making late payments or consistent part payments.
Too much unsecured credit such as multiple personal loans.
Multiple applications for unsecured loan getting rejected.
Defaulting as a guarantor.
High utilization of approved credit limit or overshooting the limit.
Errors in record by banks and other finance institutions.

Advantages of maintaining high credit scores

Easy availability of credit such as loans. According to the official CIBIL website, about 90%
of loan applicants with CIBIL score greater than 700 are approved for loans.
Quick processing of loan and credit card applications.
Ability to negotiate interest rates owing to your strong financial standing.
Though not guaranteed, the possibility of negotiating or waiving processing fees as well as
choosing prepayment options.
How to get CIBIL credit scores online
CIBIL credit ratings can be checked online by following a few simple steps, as outlined below.
1) Log on to the official CIBIL website and click on Know Your Score.
2) Fill up the online form which asks for details such as name, date of birth, address, id proof,
past loan history and other relevant data.
3) On filling the form and accepting changes, you will be taken to the payments page. You can
choose from multiple modes of payment such as prepaid cards, credit cards, net banking etc.
A payment of Rs.470 has to be made to CIBIL to get your credit report.
4) After successfully making the payment, you will be taken to an authentication page. Here, you
will be required to answer 5 questions related to your credit history of which you will have to
answer at least 3 questions correctly to authenticate your identity with CIBIL. Your report will
be sent to your email address within the next 24 hours.
5) If authentication fails, you can fill and send a hard copy of the application to CIBIL by mail.
You will subsequently also receive the report by mail.
Difference between CIBIL Report and CIBIL Score
A CIBIL report, also known as a Credit Information Report (CIR) is a document listing all your
borrowings and repayment histories. The CIBIL score or rating is derived out of this data as well
as other variables that affect your financial position.
CIBIL scores have become the benchmark for credit worthiness in India. While CIBIL was the
first Indian credit bureau, other international players have also started providing credit scores in
recent years such as Experian Credit Information Company India Pvt Ltd. The importance of
credit checks should not be undermined.
The credit report is a report that includes your credit score as well as other details on all your
financial transactions related to credit. Your credit score is just a part of the report, which has a 3
digit number which will be anywhere in the range of 300 - 900. The credit score is a depiction of
your creditworthiness, while your report will include payment history, number of loans, your
outstanding balances of any loans, total of your credit limit, loan details of all loans taken from a
diverse pool of lenders. The credit report is more like a report card for your credit, and the credit
score is like the percentage you get on your report card. The higher your credit score is, the better
it is for you. An average score of 750 is considered good for lenders to provide you with good
deals and better rates of interest.

FAQs on CIBIL/Credit Score

Q. Whats a CIBIL score?
Banks, as part of their due diligence process, gauge the creditworthiness of individuals based on
credit scores. The information listed on your credit report includes several variables that CIBIL
uses to set your credit score. CIBIL score, therefore, reflects the extent of the probability of a
default. An individuals credit history is submitted to CIBIL by banks and financial institutions
on a monthly basis.
Q. What do high and low credit score determine?
A high CIBIL credit score essentially means less probability of a default. A low CIBIL credit
score reflects high probability of a default.
Q. How can you get your CIBIL score?
Log on to the CIBIL website and click on the know your score tab to get a personalized credit
score. Fill an online form which requires you to include details such as your name, date of birth,
income, identity proof, address and phone number, in addition to the loans taken by you.
Following payment of a certain sum, you will have to submit authentication details which
include questions based on your credit history. After authentication, your credit score will be
emailed to you.
Q. Will opting for a credit card decrease my score?
If you have a zero outstanding balance on your old credit card, there is no reason to unduly
worry about it and close it. If you have a credit card with a clear payment history, it will not only
reflect your responsible credit behaviour but also keep your utilization rate low, which impacts
your score positively.
Q. Does NIL credit mean a good score?
There are many who avoid loans like the plague, hoping that their CIBIL score will then be
perfect. Nothing can be farther from the truth. If you do not borrow, you do not have a credit
history and, therefore, no credit bureau can assign a score. Consequently, you might find it
difficult to get a loan. Timely repayments are of seminal importance to ensure that your score
remains above 750.
Q. How to check CIBIL score without paying fee?
The fact is, CIBIL does not furnish your CIBIL report or score without levying a fee for the
same. There are online websites and tools that offer to estimate your credit score based on certain
input parameters but this score is just an estimated figure and not your actual CIBIL score.
Actual score can only be obtained by paying the required fee.

Q. Why is CIBIL score important for customers?

Credit score is a distinct numeral assigned to each individual based on analysis of his/her credit
report. A higher credit score signifies a health credit history and a lower score signifies a bad
credit history. Any score between 700 and 900 is considered good while that below 700 needs to
be improved in order to come in the good books of lending and banking entities. Your CIBIL
score depicts your credit-worthiness as a customers and is hence an important numeric figure.
This score is looked up by banks when you apply for any credit channel like loan or credit cards.
Q. How is CIBIL score calculated?
CIBIL score is calculated by the Credit Information Bureau India limited in conjunction with
various registered credit bureaus of the country. The score takes into account your payment
history, payment pattern, your existing credit channels and the amount of credit that you own.
Types of credit reports
Credit Information Report (CIR) This report is available for individuals and contains all their
credit history, and a statistically derived figure called credit score. A CIR is a major document
which any potential lending institution will look at before processing your loan or credit
application.
CIR consists of various sections detailing your credit history. Major attributes of a credit
information report are outlined below.
Payment history
This section shows your credit repayment history in the past 3 months including loans and credit
card payments. DPD (Days Past Due) shows the number of days by which you delayed a
payment.
Current outstanding balance
This shows all your current credit due to be repaid. This helps in realizing where you stand in
terms of EMI payments, and if you can avail more credit or not.
Enquiries
This section lists all the enquiries made about your credit score in the recent past. A high number
of enquiries is a red flag. Potential lenders may view it as desperation for credit, also possibly
because you were not a suitable candidate and had to approach multiple lenders.
New credit facilities
In this section, you can see recent credit sanctions in your name.

Company Credit Report (CCR)

A CCR is a report outlining a companys credit history, consolidated from the data forwarded by
various banks and financial institutions in India. While CCR doesnt substitute credit ratings for
businesses provided by an approved agency, it is still an essential component when loan
applications are processed by an institution.
The primary difference between a credit rating and a company credit report is that the latter is
drawn up from data directly submitted by banks, while credit ratings are generally solicited by a
corporate customer and consequently issued by a relevant credit agency after evaluating related
documents and interviewing companys management.
CCRs are typically used by lenders to make quick, informed decisions on loan approvals. A good
CCR can be used to get better terms on credits from business partners, being testament to a
companys strong financial standing.
What can affect your CIBIL score?
Mentioned below are a number of factors that may affect your CIBIL score.
Payment history: Your payment history plays a major role in developing a good CIBIL record.
Making late payments on credit cards or delaying/defaulting on your EMIs regularly can
negatively affect your credit score, indicating that you are not serious about or capable of
clearing your existing debts.
Increased credit limit: Increasing the current balance of your credit card may negatively affect
your credit score since it is considered to enhance your repayment burden. However, increased
spending on your credit card does not affect your credit score as long as youre credit utilisation
is in proportion to your credit limit.
Unsecured loans: A high percentage of unsecured loans such as personal loans and credit cards
may affect your credit score. A balanced combination of secured and unsecured loans adds
positively to your credit score.
Multiple loans & Credit Cards: If you have multiple loans, credits cards and new accounts, this
may affect your credit score, and banks may review your loan application more carefully.
How to improve your CIBIL score?
Building your credit score is not really hard, but it does require systematic planning and
execution. Some of the best ways to improve your credit score are mentioned below.
Know where you stand The first step towards building your score is to know where you stand.
Having an idea about your current position and preparing a target can help you work towards it.
Checking this score can also help you determine if it is factual and identify any errors, if any.
Immediate correction of errors could help in a quick increase of score.

Never delay payments Procrastination is one of the harshest truths of our current world, with
most of us falling prey to it. Delaying your bill payments, be it credit card or loan EMIs could
see your score dipping, which makes timely payments a key role in maintaining a decent score.
While a bank may be OK with ignore the first delayed payment, repeated delays could bring
unwanted attention from their part.
Mix your credit Just like variety adds spice to your life, variety in terms of credit can do a
world of good to your credit score. A mix of secured and unsecured loans can reflect favourably
on the score, with a varied portfolio preferred by most lending organisations.
Dont max out your credit In times where we want to enjoy things to the maximum, there is a
high possibility for us to go overboard when it comes to our credit limit. Staying within the limit
is bound to build your score, while exceeding it could come at a price. This shows lending
agencies that you are not carried away and are a responsible individual who knows his/her limit.
Limit your cards/loans A quick look at our wallets will show that a number of us have more
cards than we need. While a problem of plenty is good in a few cases, owning too many credit
cards can have its own drawbacks. Not only does it complicate credit repayment, but it also
pushes us to spend more than we need, leading to debt in our life.
Credit cards and other similar tools were designed to be an added benefit in our lives, but
misusing any provision can throw things out of gear. Keeping a few simple pointers in your mind
could ensure that you stay on the right financial track.
FAQs Regarding Checking CIBIL/Credit Score
Q. Does being a guarantor for someone affect credit scores?
Yes, if you agree to be the guarantor for someone and they fail to pay the loan back in time, you
become liable for it. This means that you might have to pay it back which will put an undue
strain on your finances and may even cause you to default on it.
Q. I paid my credit card off but the report shows outstanding balance. Why is that?
CIBIL reports reflect only data that has been received by them from your creditors. If they have
not been updated about your recent activity, it wont show on your report.
Q. I have a dispute regarding my credit report. What do I do?
If you have a dispute regarding your credit report, you need to notify CIBIL about it in writing.
Once they receive the grievance they will contact the creditors to confirm and redress the
problem.
Q. I have informed CIBIL about inaccuracies in my credit report. Will they correct it?
No, CIBIL does not make any changes to the data they have on you. What they will do is to
approach your creditors to get the latest information. If the creditors provide them with said
information, they will update it else, they will take no action.
Q. What happens if there is a problem with the payment gateway and I am charged twice?

If you are charged twice while making payments using cards or net banking, then you should
write to CIBIL. They will confirm the error and refund any extra amount that you may have been
charged.
Q. What do I have to keep in mind if I am paying via DD?
The main thing to keep in mind is that there should be no mistakes on the demand draft and that
it should be payable in Mumbai. If there are mistakes on the DD then the DD may be rejected
and your application not processes till they receive the relevant payment.
Q. Can I pay by cheque?
No. You cannot pay by cheque. You can only pay via DD or online banking.
Q. When should the payment reach CIBIL?
The payment for your application must reach CIBIL within 30 days of applying for the report or
youll have to apply again.