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Some Commonly Asked Questions about CIBIL Score

Some Commonly Asked Questions about CIBIL Score

July 9, 2022
5 min read
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Some Commonly Asked Questions about CIBIL Score
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Your CIBIL score is the key to fulfilling your financial goals, such as buying a home or buying your dream car. If you have a good credit score, lenders will approve your loan applications and may offer you the lowest possible interest rates.

When you apply for any credit product, the first thing any lender will do is check your financial report card – your credit history. Your credit history is a snapshot of how you are managing your finances. A good credit score will work in your favour. Hence, it is critical to understand your CIBIL score and how it works so that you can increase your credit score.

Here are some commonly asked questions about the CIBIL score that will help you to assess your credit behaviour:

What is CIBIL?

CIBIL stands for Credit Information Bureau (India) Limited. It is India’s first credit information company that maintains all credit related activities. It deals with consumer credit record and credit records of companies and institutions as well.

What is a CIBIL score?

A CIBIL score is a 3-digit number that a person is assigned based on their credit borrowing and repayment history. Different credit bureaus have different models of scoring. The higher the score, the better it is. A low credit score indicates that the person has somehow failed to manage the debts they had taken. That will lower their credibility as a borrower.

How can you get your CIBIL score?

Visit CIBIL website to get your personalised credit score. Fill in the online application form that will ask for details such as name, date of birth, income, identity proof, and address proof, contact number, along with the details of any loan taken by you ever. You are required to pay a certain amount and authenticate the details shared by you, post which, you will get your CIBIL score.

What is the highest and lowest CIBIL score?

The scores range from 300 to 900, with 300 being the lowest and 900 being the highest CIBIL score. Generally, a CIBIL score of 750 or more is considered to be good by lenders and financial institutions.

What factors impact your CIBIL score?

Mentioned below are three (3) major factors that impact your CIBIL score:

a) Payment History : Not making payments on time or defaulting on your EMIs will impact your CIBIL score.

b) Multiple Applications : Applying for multiple credit products within a short duration of time will impact your CIBIL score as it may be seen as a struggle with finances.

c) Credit Utilisation Ratio : Having a credit utilisation ratio of more than 30% will negatively influence your credit score.

Will checking the CIBIL score have a negative impact?

You must check your CIBIL score at least once a year to assess your credit report. If you want to keep track of your report, you can opt for a soft credit check. However, if you are applying for a loan or, say, a credit card, lenders and financial institutions will run a hard credit check on your report. This will lower your CIBIL score.

What is the difference between a hard credit check and a soft credit check?

A hard credit check is a detailed credit report, and that will knock off a few points off your credit score. While as a soft credit check is an overview of your credit report that doesn’t leave any footprint on your report. It doesn’t decrease your credit score.

Should you check your CIBIL score before applying for a loan?

Lenders and financial institutions consider your CIBIL score as an indicator of your creditworthiness. Whenever you will apply for a personal loan, or, any type of loan or credit card, a credit check will be conducted. To lower the chances of rejection of your application, you must check your CIBIL score before applying. Knowing your score in advance will help you prepare for the outcome. Also, if you have a low credit score, you can work towards improving it before applying for a loan.

How long does it take to improve a CIBIL score?

How many days does it take to improve a credit score is one of the most commonly asked questions on CIBIL score. Your credit score will not improve overnight. However, on an average, it will take 4-12 months to improve your credit score, if you have a particularly low score. Remember that building a credit score will need financial discipline, patience, and efforts.

How to rectify any error in your CIBIL report?

If you find any error on your credit report, you can file a dispute for the same with CIBIL to get it rectified. While filling out the dispute form, you will be required to enter a 9-digit control number that is used to identify the report that has the dispute.

What are the possible errors in a CIBIL report?

Errors in your report will bring down your credit score. Hence, check your credit score regularly to assess your financial understanding and keep your CIBIL report error-free. Here are some possible errors that you may find in your credit report:

a) Wrong details of overdue amount

b) Incorrect outstanding balance

c) Duplication of account

d) Inaccurate personal details

How to improve your CIBIL score?

There are a plenty of factors that determine your CIBIL score. Identify the factors that are impacting your score and start working on those grey areas. Do not default on your EMI payments or loan repayments. Ensure that you pay off your debts on time and in full to improve your credit score. Limit your credit utilisation ratio should be less than or equal to 30%. If you are maxing out your credit cards, it’s high time for you to create a budget.

Unexpected twists and turns are a way of life. You may need a loan or an additional credit card to meet your financial needs at some point, whether for personal or business reasons. A good credit score is one of the most important factors that banks and financial organisations examine while assessing your application. Hence, to achieve financial fitness, manage your finances efficiently.