CIBIL Full Form

One of the most important factors in deciding the credit facilities you can avail of is your CIBIL Score. One of the credit rating system types, the CIBIL full form is Credit Information Bureau India Limited. It is the most commonly referred credit rating agencies in India that lend institutions rely upon to understand if an individual is a low-risk or high-risk borrower.

Learn all about how you can maintain your credit score and why it is important to know all details, including CIBIL long form. 

When you approach any bank or lending institution for a loan or credit card, CIBIL score calculation is the first step. CIBIL full form is Credit Information Bureau India Limited. It is the credit score given to individuals by this credit rating agency known as TransUnion CIBIL, after it was taken over by the latter.

Out of the four primary credit rating agencies in India, CIBIL is the most popular one. The other three are Experian, CRIF and Equifax. CIBIL maintains the credit records of over 600 million individuals. It is licensed by the Reserve Bank of India and is the most important one for major lending institutions in the country. 

Also Check: Company cibil score?

The Credit Bureau of India was founded in 2000 under the recommendation of the Reserve Bank of India. The Siddiqui committee suggested forming a credit rating company to verify the creditworthiness of individuals and companies.

The agency became operational in April 2004. This was the commercial bureau that maintained records of individuals. The commercial bureau became operational two years later, in 2006. The CIBIL Score, the first-ever generic model for risk scoring, was introduced. People were able to check my CIBIL Score individually only in 2011. You can get a free CIBIL report annually to check your eligibility for a different loan and credit products.

While the CIBIL long form remains unchanged, the company is formally known as TransUnion CIBIL today. TransUnion, one of the most popular credit rating agencies in the United States, acquired 92.1% stakes in the company. 

Now that you know CIBIL Score full form, it is important to understand why this credit rating agency is important: CIBIL plays an important role in our economy for the following reasons:

• It provides a standardized evaluation process: The credit report and CIBIL score provide a standardized process to evaluate individuals and companies for any credit. It streamlines the process of lending loans, and credit cards as all lending agencies refer to the CIBIL score to decide whether the borrower is low risk or a high risk one.
• Helps improve the financial market: CIBIL not only evaluates individuals and companies' creditworthiness but also provides information on the overall financial health. This makes it easier to create credit products to boost the growth of small and large companies, but it also gives us reliable standards to decide investments in these companies. By pushing organizations to maintain a good credit score, they also stabilize the market and reduce the chances of losses or inaccuracies in the financial market.
• Better financial literacy:  Consumers can easily carry out an online CIBIL score check by PAN number. This helps them understand what measures they need to take to maintain or improve their credit score. Consequently, their financial behaviour also improves, giving them better access to credit.  
• Transparency in the credit system: Lenders can easily verify the risk associated with each individual and organization when it comes to lending any credit. CIBIL provides a detailed credit history with repayment patterns, loans availed and applied, and other essential information to assess loan requests. Consumers pursuing a higher credit score also reduces the risk of defaults and losses to the lenders. 
• Risk premium evaluation:  By setting internal standards with respect to the CIBIL score for any product, lenders can also fix their risk premium. This means that they can decide upon the penalties or the premiums that will be levied on customers with a lower credit score to protect themselves from defaulters and any issues with the credit extended. 

Additional Reading: How to check cibil defaulters list?

CIBIL Score is a three-digit number ranging from 300 to 900. The closer the number is to 900, the higher the individual's credit rating. Although the good CIBIL score range varies from one bank to another, it is usually 700 and above to avail any credit.

If you have never availed of any credit, then you will have a lower credit rating. This can be improved by availing of loans or a credit card and making regular repayments towards it. Having a higher credit score gives you several benefits such as: 

• Faster approval or loan or credit card
• Pre-approved credit facilities 
• Lower rates of interest 
• Better repayment terms 
• Discount and waiver of any processing fees 
• Higher credit limit and loan amount 
• Lower margins on loans 
• Access to unsecured loans in case of an emergency 
• Access to zero interest EMIs to purchase high-value consumer goods  

There are different options available to check your CIBIL Score online: 

• From the TransUnion CIBIL website: You can log on to the TransUnion CIBIL website in order to carry out CIBIL score check online free. You have to create an account and then provide the necessary details in order to get your CIBIL Score. You can even get one detailed CIBIL report for free every year. If you wish to access it multiple times, you can opt for a subscription.
• With online CIBIL Score Calculators: Several websites provide you with a free CIBIL score calculator. All you need to do is enter your personal details and your PAN to instantly get your CIBIL Score. 

Additional Reading: What is cibil grievance?

CIBIL Score is calculated based on what is your credit history. Various factors are taken into consideration to evaluate your final CIBIL Score:

• Payment History: Your repayment history accounts for 30% of your credit score. A record of all your past payments towards loans and credit cards is maintained to check if you have been making your repayments on time. In case there are any delays, then it has an impact on your CIBIL credit score. 
• Credit exposure: This refers to how much credit you have availed in the past. Not only the debt that you already have the applications that you have made also matter. If there are multiple applications in a short period of time, it can impact your credit score negatively. Credit exposure accounts for 25% of the CIBIL Score. 
• Credit duration and type: The duration of your credit exposure and the type of credit that you have availed of matters. If you have more unsecured loans, it can impact your credit score negatively. This accounts for 25% of your CIBIL Score. 
• Other factors: There are various other factors such as the usage of your credit card, income, credit behaviour that account for 25% of your CIBIL Score.

You can improve your CIBIL Score by learning how to read CIBIL report. This allows you to take necessary measures, such as:

• Clearing any disputes or inaccuracies in your CIBIL report 
• Improving the repayments made towards your loans
• Ensuring that you do not overuse your credit card 
• Avoiding cash withdrawals on your credit card
• Maintaining a balance between secured and unsecured loans 
• Avoiding too many loan and credit card applications in a short span of time
• Make sure that you apply only for loans where you are likely to get approval. 

Click to Check: Cibil dispute status?

All banks and lending companies have a fixed CIBIL score for home loan. Usually, the CIBIL score required for a home loan is lower than the other types of loan because this is a secured loan. The property that you purchase or build is mortgaged against the loan.

However, if you are wondering what is a good CIBIL score to get your loan approved, then you need to maintain it above 650 for most lenders. Having a higher CIBIL score gives you the following advantages: 

• Faster approval of your loan 
• Higher quantum of loan 
• Lower margin
• Lower rate of interest 
• Better repayment terms

Also Check: SBI Home Loan Cibil Score

The CIBIL Score for personal loans is higher because these loans are unsecured. They are designed to help you whenever you have a financial emergency. In case you are looking for quick approval on your personal loan, then you must maintain a CIBIL score of over 700.

Some banks and lenders may give you a personal loan even with a lower CIBIL score. However, there are some repayment conditions that you will have to comply with: 

• Higher rate of interest 
• Provide security against the loan 
• Lower quantum of finance 

Also Check: SBI Personal Loan Cibil Score

Credit cards are among the most important forms of credit offered to you on the basis of various factors. Your CIBIL score is one of the deciding factors when it comes to your credit score. The minimum CIBIL Score for credit card is 700. It shows that you are regular with your repayments and will be able to clear your dues in time.

When you have a good CIBIL score, you get additional benefits such as: 

• Better credit limit 
• Lower interest rate 
• Additional reward points and benefits 
• Faster approval of credit cards 
• Pre-approved credit card facility

The key to your CIBIL Score is to make sure that you keep your repayments towards any credit regular. When you do so, you can build your credit faster. Higher credit keeps you secure whenever you are in need of any financial aid in the form of a loan or credit. For companies, it builds more trust among your investors, allowing you to raise capital easily as well.

Additional Reading: What is minimum cibil score?