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Effects of PAN Card on CIBIL Credit Score

Effects of PAN Card on CIBIL Credit Score

finance
July 9, 2022
5 min read
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Effects of PAN Card on CIBIL Credit Score
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A PAN card is a government approved document used as Proof of Identity. Your PAN card details are updated on the CIBIL score report, however, it doesn’t impact your CIBIL credit score. But what if you update or change any information on your PAN card? Will that have an impact on your credit score? 

A PAN or Permanent Account Number, is a unique alpha-numeric identification number granted to citizens of India, whereas a CIBIL credit score is the three-digit number assigned to individuals in terms of their creditworthiness. PAN is important since it helps in the prevention of tax evasion and serves as an identification proof document. As it is unique, two persons cannot have the same number on the PAN card. A person can only have one Permanent Account Number, according to Section 139A(7). 

How does a PAN Card Affect your CIBIL Credit Score?

Your CIBIL credit score is not impacted by your PAN details. For example, if you happen to change or update the existing information on your PAN, it will not hit your CIBIL credit score. Updating or revising information such as your date of birth, financial transactions, residential address, or any other personal and financial details will have no impact on your CIBIL credit score. 

However, when your PAN card details are updated, the CIBIL software may show a warning in your CIBIL account. If you were considering updating your PAN card details to improve your CIBIL credit score, understand that it will not make any difference. 

However, there are many benefits to linking your PAN card to your CIBIL account. Listed below are some of the benefits: 

  1. The linking of PAN to your CIBIL account prevents people from using the same PAN number. If two people use the same PAN, it will result in inaccurate credit reports, which may in turn, spoil your credit score. For someone who has never applied for a loan or a credit card, it could be a bad idea as the loan or credit card application may be denied due to a bad credit score. 
  2. PAN is required for logging into any credit bureau website because it authenticates your identity. Linking PAN to the CIBIL account is mandatory. 

If you are looking to improve your CIBIL credit score, you have to develop healthy financial habits over the years. Take a look at how your CIBIL credit score can improve and what steps you need to follow. 

Ways to Improve your CIBIL Credit Score

Your credit score is always examined before when you consider taking out a loan, or applying for a credit card. Banks and potential lenders use your CIBIL credit score to determine whether or not it is risky for them to lend you money for a specific period of time. They want to know if you will be able to repay the money they loaned you in a timely manner. This is where your credit history and report play a dominant role.

Here are a few tips to improve your CIBIL credit score: 

1. Get a Credit Builder Card

A credit card can help you improve your CIBIL credit score. Lenders or financial institutions will look at your previous credit history to determine whether you are a risk-worthy applicant. However, if you have never had a credit card or loan, you won't have a credit history, which could cause problems — how can lenders assess your creditworthiness if they can't assess your previous credit history? Take out a credit card first and make a few transactions each month to establish a solid credit history. This can demonstrate your financial management abilities and help you improve your CIBIL credit score, but you will have to pay it off eventually.

2. Don’t Miss or Make Late Repayments

Late and missed payments can linger on your credit report for years. Talk to your credit provider to see if you may get this mark removed when you made a late payment due to reasons beyond your control and made the payment quickly when you realised it. The best way to avoid such situations is to set up direct debit. With a direct debit set up, you do not have to remember the last due date for the repayments. So, missing out on a payment due date is out of the picture. 

3. Avoid Multiple Applications

Do not make multiple applications for personal loans or credit cards in a short period of time. Every time you apply for a new financial product, a potential lender or financial institution will run a hard credit check on your credit report, resulting in a loss of a few points from your CIBIL credit score. Also, applying for multiple credit products within a short period of time portrays an image of you in front of the lenders that you are possibly struggling with your finances. Hence, avoid making too many credit applications. Work on your credit score to improve it before you apply for a loan or credit card. 

Coming back to the PAN card and its effect on your CIBIL credit score – you can check your CIBIL credit score using your PAN card. There are 3rd party mobile applications that help you check your CIBIL credit score with the help of your PAN card details. Check your CIBIL credit report periodically to ensure your report is accurate and updated. If you change your PAN card details, check your credit report and see if the same is reflected on your account. If not, contact the credit bureau and inform them of the change so that your CIBIL account is updated with the new and revised information on you. 

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