Why is my CIBIL Credit Score Zero or Negative? What does a Negative Credit Score Mean?

A CIBIL credit score is an indicator of your financial health. CIBIL as a credit rating agency calculates a score based on your repayment behaviour that is generally considered by the lenders for measuring your credit consuming eligibility. It is a 3-digit number that ranges from 300-900. However, a CIBIL credit score could be zero or negative as well. Let us understand how this scoring system works and what does it mean to have a negative CIBIL credit score. 

A CIBIL credit score is calculated on the basis of an individual’s entire repayment history, the loans and credit cards they have, any active or closed accounts, along with their other credit related activities. It facilitates the understanding of the creditworthiness of borrowers by credit providers (such as banks, credit card firms, or other potential creditors). A borrower may pay a lower interest rate and be eligible for additional loan options with a higher CIBIL credit score. 

However, there is a chance that your CIBIL credit score may be zero (0) or negative (-1). Let us look at the scoring system used by CIBIL to help you understand what it means to have a zero (0) or negative (-1) score. 

What does it Mean if your CIBIL Credit Score is Zero?

If your CIBIL credit history is less than six months old, your credit score will be zero (0), as the credit reporting bureau does not have enough information to assess your credit history and assign you a credit score. It takes time to build a credit history and hence, if you are new to credit and you have just taken out your first loan or a credit card or any other form of credit, you may find zero (0) as a CIBIL credit score on your report. 

It doesn’t reflect anything negative about your credit profile. Do not worry if you spot a zero (0) on your CIBIL credit report. Rather wait patiently and keep working on your credit borrowing and repayment behaviour. 

No credit history? Here’s how to build one. 

Is there any Difference between a CIBIL Credit Score of Zero (0) and Negative (-1)?

If the individual's CIBIL credit history is only available for less than six months, a credit score of zero or NA means no history is available, and the credit reporting bureau does not have enough information to decide on your credit account.

While a credit score of negative (-1) or NH means you simply do not have a credit history. It indicates that an individual has no credit accounts, meaning they have not yet taken out any loans or credit from which to build their credit profiles. The CIBIL credit score is computed using a minimum of six months of credit history.

Is it Possible to Get Loans and Credit Cards with a CIBIL Credit Score of Zero (0) and Negative (-1)?

Yes. There might be lenders or financial institutions who will agree to lend you a line of credit even if you have a negative or zero as a CIBIL credit score. Listed below are a few ways to get a loan or credit card with zero or negative score:

1. Look for banks or potential lenders who are willing to consider less-than-ideal credit histories, and places more emphasis on other aspects such as the employment history, income, and consistency of your bank account balances.
2. Apply for secured loans or small loans such as a secured credit card, gold loan, joint loan, or auto loan, and repay the whole loan amount on a timely basis before the due date to boost your CIBIL credit score.
3. Take a loan with collateral. You may decide to take out a loan against your own property. In this type of loan, you may be able to get a sizeable loan with a low interest rate (since it eliminates the potential risk associated with the loan amount, such as timely repayment) based on the value of your property, such as gold, real estate, FDs, vehicles, etc. Collateral serves as an assurance that you will be able to pay back the loan. If you are unable to do so, the lenders may purchase or sell your possessions to recover the amount they had lent you in the first place. 

How to Build your CIBIL Credit Score?

Whether or not you will be granted a loan or credit card depends on your CIBIL credit score. Your CIBIL credit history includes previous loans taken out and payment habits related to them. While a low CIBIL credit score denotes poor creditworthiness, a high credit score shows strong creditworthiness. 

Here are a few ways to boost your CIBIL credit score from scratch: 

1. Review your CIBIL Credit Report Regularly

It is a good idea to routinely check your CIBIL credit report because it will reveal two details that are vitally essential to your credit score. 

1. The first is the loan or credit card where there have been defaults or late payments, which have decreased your CIBIL credit score. 
2. The information that is listed in the CIBIL credit report will help in improving the credit score because you can always contact the bank and CIBIL to have the problem fixed if you discover that there is any information, such as defaults or payment delays, included in the report.

2. Do not Apply for Multiple Loans

Applying for multiple loans or credit cards will give an impression that you are credit hungry and you need credit as you are somehow failing to manage your finances with whatever you are earning. 

3. Repay your Debts on  Time

Ensure you make all the repayments on your loans and credit cards on time and in a regular manner to help build your CIBIL credit score. Missing repayments will reduce your credit score. 

We live in a period when we need money to make money, thus we frequently use valuable time in our life to consider how to do so. One might assume that borrowing money will be simpler now that banks and lending organisations are popping up in every town and city, but this may not always be the case. Due to the risk associated with lending, practically all financial institutions use a set of standards to determine a person's ability to repay a loan. Maintaining our CIBIL credit ratings is important since they may be the single biggest factor in determining whether or not we may get loans.