What is CIBIL Score?
A 3-digit score that reflects your credit history is the CIBIL TransUnion Score. This credit score, which is derived based on the credit history gives an insight to your finance management. The dimension of this score is 300 to 900. If your credit score has to be extraordinarily good then it has to incline towards 900. If the score is below 750 then there are chances that your request for a loan will be declined by banks/financial institutions (depending on the loan type).
Credit history is nothing but a record of your Credit Card and loan transactions and how they are managed. In other words, if you are a compulsive defaulter, the same will be reflected in your credit history which will in turn impact your credit score. So, if you have to maintain a good score, you will have to be consistently regular in repayment of your loans and Credit Card dues.
There are four credit agencies, i.e., Experian, Highmark, CIBIL and Equifax that give score approximate using their specific algorithms and calculations.
Now it is a trend followed by all banks and financial situations to verify your credit score and credit report before taking a credit decision. Typically, a credit score over 750 is considered good.
What is a Free CIBIL Score Calculator?
With the details of the financial behaviour in respect of the loans for which repayment has commenced and payment of your Credit Card dues, you can get an estimate of your CIBIL score online using a CIBIL score calculator. There are many sites where you can use this CIBIL score calculator for free.
Why Free CIBIL Score Calculator?
With the CIBIL score calculator, you can:
- Keep regular track for credit score and can view a credit report which is updated monthly
- Check your eligibility for a loan and provisions to get a loan at a lower interest rate
- A detailed credit report with analysis can be generated
- Get regular updates of your credit score
Steps to Get a Free Credit Score and Report
From January 2017, the Reserve Bank of India (RBI) has made it mandatory for all the credit information bureaus to enable checking of credit score online and providing a credit report for free once every year.
You will have to follow these simple steps for obtaining a free credit report from CIBIL:
- Visit the official CIBIL website www.CIBIL.com.
- Create a username and password. Provide all the required details like mobile number, name, and email Id on the form provided for this purpose and click on continue.
- Provide your PAN number. The correct PAN number has to be provided to go on to the next step.
- The questions regarding your loans and Credit Cards should be answered correctly. The credit score will be calculated on the basis of your replies.
- The above are the four main steps to be followed to check the CIBIL score
- In this step, several paid subscriptions will be suggested, in case you want more than one report in a year. If you just choose 'No thanks' at the bottom of the page you will go into the next stage.
- Now an account is created and a confirmation message will be displayed
- Log in with the username and password that you have created earlier. A self-authentication is required to proceed further. An OTP will be sent to your registered email id. Enter the OTP. You will be asked to change the password and login again.
- The moment you log in, all your personal details will be automatically populated. Now enter your contact number and click on submit.
- Once the form is submitted your CIBIL score will be revealed and you can also get a CIBIL report
It is not sufficient to draw a report once a year but you have to periodically monitor your credit score if you have to maintain a good credit history. The banks and financial institutions update the CIBIL data once in a month.
How is CIBIL Score Calculated?
The Credit Bureaus arrive at the Credit Score with their proprietary algorithms and calculations. The basic components required to assess the Credit Score are the credit card and loan payments.
According to CIBIL, there are four factors relating to the credit behaviour that are considered while calculating the CIBIL score. They are:
Credit history: Credit history is drawn based on your earlier track record in respect of loan and credit card payments. The formula for calculating the score gives 30% weightage for this aspect, i.e., the borrower's credit history. The data in respect of loan repayment of every individual borrower is shared by the banks and financial institutions with CIBIL on a monthly basis. The data is compiled by the Credit Bureau for calculating the credit score. The data captured contains details of equated monthly instalment (EMI) and Credit Card payments for the last 3 years as provided by the banks and financial institutions on a monthly basis. The details of prompt payments, delayed payments, settled and written off accounts also will be captured.
Credit utilisation: Your credit utilisation level is determined by the present loan outstanding divided by the limit available. There will be a effect impact on your credit score if your credit utilisation level is high. High level of credit utilisation reflects the extent of the financial burden. The aspect of credit utilisation is given a 25% weightage for calculation of credit score.
Credit mix: Credit Mix, i.e., the extent of secured and unsecured loans also has an impact on the credit score. A healthy balance of secured and unsecured loans is recommended to maintain a good score. Unsecured loans on the higher side will impact your credit score negatively. A weightage of 25% is given for this factor, for calculation of credit score.
Other factors: The number of applications submitted for loans also bears an impact on the credit score. Indiscriminately applying for loans at different banks will result in a decline in the credit score. The banks and financial institutions will be skeptical to lend to an applicant whose credit report reveals a large number of enquiries. This factor is given a weightage of 20% for the purpose of calculation of credit score.
In Which Case You Will Have to Pay for the CIBIL Report?
The RBI has made it mandatory for all the Credit Bureaus to provide a credit report for free once a year since January 2017. However, if you need a credit report more than once a year, you can still get one by paying a fee.
For this, you will have to log in to the official website of CIBIL i.e., www..cibil.com and follow a few simple steps.
- Select the 'Get Your Credit Score' option
- Select a product for subscription
- Provide details of identity proof and PAN
- Then select the option 'proceed to payment'
- Make payment when you are directed to the payment gateway
- The credit report will be generated and sent to your email id. If you opt for a hard copy then the same will be sent to your shipping address.
Why Should You Know Your CIBIL Health?
The credit health needs to be monitored for the following reasons:
- To ensure correctness: The credit report contains details regarding your loans and Credit Cards and a track of your payments towards the outstanding dues in respect of the same. These details will be shared by the banks/financial institutions with CIBIL on a monthly basis. Monitoring the reports periodically will ensure accuracy regarding the details reflected in the report. In case of any discrepancies, the same can be taken up with the dispute redressal forum of CIBIL.
- To keep a track of loan accounts: Sometimes the CIBIL report may contain a loan that you have not availed. Close monitoring of the CIBIL report will enable you to keep a track of such wrong inclusions in your credit history. In case, such a discrepancy is noticed the same can be taken up with the dispute redressal forum of CIBIL for rectification.
- Maintaining the health of your credit: Credit report gives a summary of your loan account and Credit Cards and the outstanding balance. If you observe that the credit score has declined due to an increase in the number of loan accounts, you can take immediate steps to resolve the same by closing some of the accounts.
Monitoring the credit report periodically will help maintain the credit health which otherwise will deprive you of financial assistance when you would need it the most.
CIBIL Scores and Their Implications
The range of CIBIL scores is 300 to 900 to assess whether the score is good or bad. Generally, a credit score of 700 and above is considered good for secured loans and a score above 750 for unsecured loans. The details of the range of credit scores and the implications are as given below:
CIBIL Score between 700 and 900
A CIBIL score between 700 and 900 is indicative of your excellent credit history, A score of this range will enable you to get a loan easily and will also get concessions in interest rates and other charges.
A credit score of this range shows your financial discipline with regard to repayments made towards loans and other dues.
Your eligibility to get loans like a Car Loan, Home Loan, Personal Loan and, Credit Cards will improve with a credit score of this range.
CIBIL Score between 700 and 750
A credit score of this range is still considered as good. It also indicates a good repayment record. However, still, banks and financial institutions will have to conduct further credit appraisals based on the credit policies of individual bank/financial institution in order to assess the credit history.
CIBIL Score between 550 and 700
A credit score of this range is considered as not so good since it indicates some irregularities in respect of payments of outstanding dues. Lending institutions will be skeptical to take a favourable credit decision for a borrower with a credit score of this range. However, a loan may be considered if worthy collateral is offered.
Credit Score between 300 and 550
A credit score of this range is considered poor as there will be instances of write off and settled accounts recorded in the report. There will also be a record of other delinquencies and utilisation of credit beyond limits. It will be difficult to get a loan with a credit score as poor as this.