All about CIBIL Score

August 13, 2018CIBIL, Credit ScoreSuganya Arumugam

Will 1 hard enquiry affects Credit Score?

Yes, hard enquiry will always have an impact on your CIBIL Score.There are two types of enquiry available they are:-

1. Hard Enquiry are usually done by Banks/NBFCs in case you have applied for any credit requirements.This enquiry will affect your CIBIL. If your enquiry does not exceed more than one time reduction in your credit points will be 3–4 points which is negligible, whereas multiple hard enquires will have a huge impact on your Credit Score.
2. Soft Enquiry are the enquiry you do on your own Credit Score from any of the Credit Bureau.This enquiry will not affect your CIBIL.

How can I raise my credit score towards 700?

Bad Credit Score can be improved/ rebuild even without Credit Cards. Primarily you need to repair your credit history before you see your Credit Score improvement.

The following factors are to be considered in case to improve your Credit Score:-

1.Make all overdue:-

It is extremely important to pay your bills on time. This affects 35% of your score Pay on time, all of the time. Your credit scores can be significantly impacted with just one late payment reported to your credit file.

2.Pay down balances:-

If you currently have credit cards and are using more than 30% of your limit then you want to follow this portion of this guide. Pay down high balances that put you over the 30% rule. Stay under 30% and maintain a low balance as mentioned previously. This factor alone is the second biggest impact to your score at a whopping 30% of your score.

3.Pay all EMIs regularly:-

Use auto-pay to pay the minimum every month and your scores should continue to improve with healthy, responsible activity.

4.Monitor your credit score:-

It is available FREE once a year from Credit Bureaus like CIBIL, Experian, CRIF etc.Complete a thorough review of your credit report. You are legally allowed a free copy of your report from each bureau once a year. Look for inaccuracies in balances, payment history, questionable collections.

How do I check my Cibil score in India, Bangalore?

There are totally 4 credit bureaus in India were you can pull your own free Credit report they are as follows:-

1. CIBIL
2. Experian
3. Equifax
4. High Mark Credit Information Services (CRIF)

CIBIIL Report

• This is available via on offline process as of now.
• You can download this form and send it via post to CIBIL office in Mumbai (I Know!!). I hope CIBIL will soon make this available online as well.
• You would be required to send your Address Proof, ID proof and other details like Address, PAN, Mobile etc.
• Free CIBIL Report Form
• The document also contains and FAQs along with the Address
• Note, CIBIL may take upto 30 days to send you this Free Credit Report

Experian Credit Report

• Experian has a 3 step Online process
• First please fill the Free Experian Credit Report web form to get your Free Experian Credit application started
• Once you fill this, you should receive a Voucher Code in ~ 2 days and a link to your Email ID that would contain further instructions and forms to be filled online
• I am not sure if Experian has a offline/postal process as well. Here is the link for Experian offline form

Equifax Credit Report

• In contrast, this one seems to be available on mobile only Google PlayStore– AndroidApple Store – iOS. I am not sure if the Equifax report is available via other channels.

High Mark Credit Information Services (CRIF)

• Click on “Get Your Free Credit Report” on our website Credit Bureau, Data Management & Analytics
• Login with your login credentials or social media credentials or continue as guest.

Will my father CIBIL score effects me taking the personal loans in future?

No, your father’s CIBIL score will not affect yours. In case you are borrowing the lenders will always check only your CIBIL report. They are few factors that affect your score they are as follows:-

• Multiple loan application
• Cheque bounces of loans
• Credit Card Dues
• Not checking your credit report for mistakes
• Repayment History
• Utilization of Credit Limits

Hence avoiding all the above mentioned factors will help you in maintaining a good CIBIL score.You can use this free CIBIL link to check your CIBIL report.

What are the elements of the CIBIL report?

Credit information bureaus gives information about the credit profile of a person.

The following are the key elements of CIBIL report:

1. Cibil score
The credit score that can range between 300 and 900. The report will sent to the credit bureaus by all the lending agencies.

2. Personal information
Personal information such as name, date of birth, gender, unique numbers of identification documents like PAN, Aadhaar, etc will be in this section.

3. Contact information
This section contains the residential address, telephone and mobile numbers, and email id.

4. Employment information
Employment information and income as reported by banks.

5. Account information
The lender’s names, loan details and mentions if there is any amount overdue will be in this section.

6. Enquiry information
This section contains information about enquiries by lenders in the past, date of their enquiry and purpose.

What will be the chances of getting a consumer loan if the CIBIL is -1 for a salaried person?

If a salaried person has not availed any Loan, there are 3 cases :

1. The person has Credit Cards for last 6 months for which he paid his bills on or before due date, then he is likely to have aCIBIL score of 700+ which indicates decent Credit History.
2. The person has Credit Cards for less than 6 months, in this case his/her CIBIL score maybe between 1–5 which indicates Insufficient Credit History.
3. The person has no Credit History whatsoever. He/she has not availed any Credit Cards in the past as well and has no prior Loans. In such cases,the CIBIL Score is likely to be -1 which indicates NO Credit History.

In any of the above 3 listed cases, the person has no restrictions for availing any Loans that also includes Consumer loans from select Banks and NBFCs. In fact, they can also avail Personal, Auto, Gold loans and also Credit Cards.

We will also help you to improve your Credit Score. We have dedicated Relationship Managers who assist you at every step of the process. We can also help you in Balance Transfers that will help you reduce your Interest Outgo.

Is a 720 credit score good?

The range of CIBIL Score is 300–900, usually Credit Score above 750 are considered to be good.But 720 score doesn’t mean you have a bad Score, it is an average Score. More importantly, you can get loans from many NBFCs and Banks with this score. But note that you can work towards improving your score above 750 .The following are some of the ways to improve your Credit Score, CIBIL in this instance :-

• Find the reason for low CIBIL and work on it.
• Do not apply for Credit/Loans on too many places.
• Pay dues on or before due dates.
• Close any overdue loan payments immediately.
• Monitor your credit score regularly.
• In case if there is any false reporting in CIBIL than raise dispute with CIBIL and get it resolved to correct your CIBIL Score.

Knowledge about CIBIL score is essential not only for people with credit histories but also for the ones that have not applied for a credit card or a loan yet. A CIBIL score is a 3-digit credit number that is generated by TransUnion CIBIL (credit bureau) on the basis of past credit information of an individual. It ranges between 300 and 900. The closer your CIBIL score is to ‘900’, the easier it will be for you to get credit from lenders.

1. Low CIBIL does not always means no loan.

“Low CIBIL score means no loan” is not applicable in all cases. Different banks have different credit score cut-offs as per different types of loans. Therefore, low CIBIL score may get you some rejections from lenders but it does not mean that you will not be given loan at all. Even with a low CIBIL score, there is a probability that you will get a loan but at a high rate of interest. If not from banks, you can probably get it from NBFCs.

2. Even though you have never requested your CIBIL score, it still exists.

Many people have this misconception that since they have never requested for their CIBIL Credit Information Report (CIR), therefore, it does not exists. However, that is not the case. Each month, lenders such as banks report credit information of all borrowers to credit bureaus. Therefore, if your credit history exists, so does your credit score.

3. Your CIBIL score may not match with credit scores generated by other credit bureaus.

Credit scores generated by TransUnion CIBIL and other credit bureaus (Experian, Equifax and CRIF High Mark) may or may not be the same even with identical credit information. This is because each credit bureau uses their own scoring model to calculate credit scores. Another reason why your CIBIL score differs from the credit scores generated by other credit bureaus is that the updated credit information from different lenders were reported to bureaus on different days.

4. CIBIL does not edit or delete information from your credit report directly.

CIBIL generates credit report on the basis of the credit information that they receive from various credit sources such as banks and NBFCs. They do not have the authority to delete or edit your credit information directly. They can update your credit report but only when the changes are authorised and provided by the concerned credit source.

5. You can check your CIBIL score innumerable times without hurting your score.

If a person enquires about his/her CIBIL score directly from credit bureaus or through authorised third party entities, it is called soft enquiry. Soft enquires no matter how many times they are made, does not impact your CIBIL score. Your CIBIL score gets hurt when banks, credit card companies and other creditors enquire about your credit report from credit bureaus (hard enquiry). Therefore, avoid hard enquiries as much as you can.

6. Having no credit history does not mean you will have an excellent CIBIL score.

It is a common misconception that a person with no credit history will have an excellent CIBIL score. However, in reality, a person who has never had a credit card or taken any loans be it a home loan or a personal loan can never get their credit report or credit score from CIBIL. This holds true for other credit bureau too because the bureaus did not get your credit data from lenders to generate credit report and calculate credit score.

7. CIBIL does not maintain a defaulter’s list.

There is a common misconception that CIBIL and other credit bureaus maintain a defaulter’s list. However, in reality, CIBIL or any other credit bureaus do not maintain a defaulter’s list. CIBIL and other credit bureaus are only responsible for collecting and maintaining individuals’ credit information as given by member credit institutions such as banks and NBFCs. The decision to grant a loan solely depends on lenders.

8. Closing your old credit accounts will not increase your credit score.

Many people believe that closing their old credit accounts will help them improve their CIBIL score. However, the truth is that closing your old credit accounts negatively impacts your score. People who have long and stable credit histories prove that they have managed their credit responsibly in the past. Therefore lenders prefer lending money to people with old credit accounts to new credit accounts. The older your account will be, the better will be your credit score, provided you handle your credit well.

9. Applying for multiple lines of credit frequently lowers your CIBIL score even if you repay loan amount on time.

When you apply for a loan or a credit card, lenders make hard enquiries i.e., request for your credit report from credit bureaus to check your creditworthiness. Unlike soft enquiries, hard enquiries are not good for your credit score. Therefore, applying for multiple lines of credit increases hard enquiries in your name, and subsequently causes your CIBIL score to drop by a few points even though you repay your loan amount on time.

10. You’re entitled to free credit report from CIBIL.

As per RBI’s directives, all credit bureaus in India including TransUnion CIBIL will have to provide a full free credit report once in a year to all individuals whose credit information they hold. Therefore, you’re entitled to free credit report from CIBIL once a year. However, if you need it more than once, then you will have to pay a small amount for it.

While each credit information company has its own proprietary algorithm to calculate an individual’s credit score, the most important elements of the score composition are centric around the loan payment behavior of the individual. Your CIBIL TransUnion Score is calculated based on the information in the “Accounts” and “Enquiry” section of your CIBIL Report. The score is calculated based on the following factors – an overview:

Credit Utilization: How much credit is the consumer using?

Defaulting/Delinquency: How many accounts are past due and by how many days?

Trade Attributes: How old are this consumer’s lines of credit? What type of credit does he have? Does the consumer have a good mix or balance of credit or is it all credit cards?

CIBIL score is calculated based on the following factors:

The applicant’s repayment history:

The repayment history accounts to 35 percent of the score. Therefore you need to clear all your bills and loans well within the due date to maintain a good repayment history. If you default even once, it will negatively impact your score.

The credit balance:

The amount you owe to the lender accounts to 30 percent of the CIBIL score. There are two considerations with regard to this, the first being the total credit limit that is being sanctioned to you and the second being how much of the credit have you utilized. The credit utilization ratio is calculated as the balance that is outstanding on your credit cards and loans. If you have made most use of the credit, then your profile will be considered as ‘risky’.

Credit mix:

This accounts to another 10 percent of the CIBIL score. If you are avoiding credit like a plague and just opted for a single type of credit, it is not helping you have a good credit score. You need to have a mix of secured and unsecured loans. This means you must have a mix of the different types of credit that is mortgage, personal loan, car loan, credit card etc. Having the right mix will increase your credit score rather than having just one type of credit.

Here is a breakup of the various factors that impact the CIBIL Transunion Score:

1. Past Performance: Individuals past performance on their debt obligations is the most important criterion and contributes approximately 30 per cent weightage to the score
2. Credit Type & Duration: Type of loan availed whether secured or unsecured loan, and the duration of credit history established contributes an additional 25 per cent to the score.
3. Credit Exposure: The total amount of credit exposure contributes another 25 per cent
4. Other factors: Other factors such as credit utilization, recent credit behavior contribute the remaining 20 per cent to the score.