What is Credit Score?
Credit Score is a 3-digit numeric summary of your credit history that represents your past credit behaviour that how well you have managed your credit products, like home loan, business loan, auto loan, personal loan or credit cards. Credit score is also commonly referred as CIBIL Score that is primarily a measure of your ability to borrow from Banks/NBFCs. CIBIL score is calculated and generated on the basis of the consumer's credit information provided by the lenders on a monthly basis.
Simply put, your credit score shows lenders whether you are a reliable borrower with minimum risk, or a risky one, as well as the likelihood of you repaying a new loan in time. When you apply for any type of loan or a credit card, the lender requests a credit report check form the credit bureau to know your repayment capability and creditworthiness.
CIBIL score ranges from 300-900 in which the higher your credit score, the more likely lenders are to approve you for new credit. Usually, a credit score of 750 and above is considered a standard benchmark and preferred by lenders for loan or credit card approval. For few banks/NBFCs, even the credit score of 700+ is also considered for credit card approvals.
If you often miss or delay paying the EMIs of your loans or your credit card bills on time, your score is negatively impacted. On the other hand, if you been disciplined with the repayments of your EMIs and credit card bills, and have not displayed any credit hungry behaviour by frequently applying for credit, your credit score shall tend to increase.
TransUnion CIBIL Limited (Formerly known as Credit Information Bureau (India) Limited) is a credit bureau that generates, maintains and calculates your CIBIL score. While TransUnion CIBIL is the oldest, there are three other credit bureaus in India that offer credit report services, such as Experian, CRIF High Mark and Equifax. Each credit bureau calculates your credit score independently on the basis of your credit information that is provided to them by banks/NBFCs on a regular basis. Each credit bureau has its own model or algorithm for calculating your credit score; hence, your score from each credit bureau shall vary.
At Paisabazaar.com, you can check and download your credit report online for FREE, along with monthly updates. We have a partnership with all 4 leading credit bureaus, including CIBIL, that enables you to check, track and build your credit score – At absolutely zero cost. Please note that checking your credit report once or multiple times does not have any impact on your score and it takes just a few minutes.
Your credit score is one of the first things that a lender Bank or NBFC will check while evaluating your loan or credit card application. In case your Credit score or CIBIL score is low, the lender might reject the application without even considering it further.
If the credit score is high, the lender will look into other details to determine, if the applicant is creditworthy. Thus, a good credit score increases the chances of your loan application being approved.
However, your credit score is not the only factor considered for a person’s ability to secure new credit. Lenders also take into consideration your income, repayment history, debt-to-income ratio, employment history, profession, etc. before approving or rejecting your loan or credit card application.
A strong credit score would not only help you access credit, but it may also help reduce your interest outgo for a loan. Many Banks/NBFCs offer preferential low interest rates to applicants with a good credit score.
Your credit score depends on a lot of factors that a credit bureau or Credit Information Companies (CICs) takes into consideration while calculating your CIBIL score. These factors depict your past credit behaviour and are reported to Banks and NBFCs, every time you apply for a fresh credit product. Some of the key factors that influence your credit score are:
Loan Repayment History: Timely payments can boost up your credit score and help in improving it significantly. Defaulting on your EMIs or making late payments negatively affects your CIBIL score. Your loan repayment history has a high impact on your CIBIL score calculation.
Duration of Credit History: The duration or age of your credit history also affects your credit score. If you have used credit cards/loans for a long period of time and made timely payments on them, then it's a sign of disciplined credit behaviour. It has a medium impact on your credit score.
Number of Hard Inquiries: Every time you apply for a new credit product, the lender makes an inquiry about your credit score. Such inquiries by lenders and financial institutions are known as hard inquiries. Too many hard inquiries may negatively affect your credit score as it shows you to be credit hungry. Multiple hard enquiries at the same time may have a considerable short-term impact on your credit score. However, if you check or download your credit report, it is considered as a Soft Inquiry that has no impact on your credit score.
Credit Utilization: The ratio of the credit amount you spend to the credit amount available to you is known as the credit utilization ratio. You should try to refrain from utilising more than 30% of your available credit on a regular basis to have a good credit utilization ratio. Even though having CUR more than 30% to 50%, it barely has an impact on credit score. However, maintaining a high credit utilization ratio or maxing out your credit limit frequently that is (90%-100%) indicates your higher dependency on credit and a potentially high repayment burden, which may negatively impact your credit score.
Credit Mix: If you have taken different kinds of loans like personal loan, auto loan, home loan and have responsibly paid it back, it shows your ability to handle different kinds of credit. Also, if you have taken too many unsecured loans like personal loans, it shows you are credit hungry and are too dependent on credit. This may work against you and shall lead to loan application rejection. However, credit mix has a low impact on your credit score and it’s unlikely that a lender will reject you just because you do not have an optimum mix of credit products.
Other Factors: Apart from the above 5 factors, which are primary in calculating your CIBIL score, there are other factors like errors in your credit report, lack of credit history and inability to fulfil your role as loan guarantor may have a very low negative impact on your credit score.
Today, most lenders consider a credit score of 750 and above from CIBIL or any credit bureau as a good credit score. It becomes relatively easier to get the loan or credit card application approved, if you have and maintain a CIBIL score of 750 or above and as close to 900. It is possible to have a CIBIL score of 750 or above and have a credit score from another bureau below 700 at the same time. Hence, it’s important that you keep a tab on credit score from multiple bureaus. It is advisable to check your credit score once every month.
Credit Score Ranges & What Its Meaning
Let us have a look at the credit score range that most lenders and bureaus consider while evaluating your credit applications:
|Score Band||Category||What Does It Mean|
|<300||"No Score"||It means you have never taken a loan or credit card and have no/limited credit history. For the best offers on loans and credit cards, you need to start building your credit score.|
|300-550||Very Low credit score||Your credit history is damaged. However, with awareness and discipline you can strengthen your credit score. Check your credit report thoroughly to find out why your credit score is low and take action.|
|551-620||Low credit score|
|621-700||Fair credit score||You are not very far from a strong credit score. To be eligible for the best offers, you should work on improving your score.|
|701-749||Good credit score||You have been responsible with credit and have displayed good credit behaviour. Most Banks and NBFCs would be happy to offer you credit.|
|750+||Excellent credit score||Your track-record with credit is superb! With this score, you would meet the eligibility criterion of most most Banks and NBFCs and are likely to get the best offers.|
Please Note: The credit score range mentioned above is only indicative and may vary from lender to lender and bureau to bureau.
Though credit score is not the only thing that lenders check while considering a loan or credit card application, it is arguably one of the most important ones. Maintaining a good credit score comes with several benefits that include:
- Greater chances of your loan applications being approved, as a high CIBIL score indicates higher creditworthiness and lower risk for the lender
- You are more likely to receive lower interest rates on loans
- You can get easy and quick approval for your loan and credit card applications
- Access to pre-approved loans based on your eligibility
- You can avail higher limit on your credit cards
- Discount on processing fees and other charges
There can be a number of reasons for a low credit score. Some of the main factors that can lower your credit score are:
- Missed or late payments of credit cards and loan EMIs
- Maxing out your credit limit or having high credit utilization ratio, regularly
- Errors in your credit report can also lower your score significantly
- Frequent or multiple hard inquiries for credit can also damage your credit score
- Closing the oldest credit account if other credit accounts are relatively new (It reduces the age of credit history)
- Settling the loan or credit card account instead of paying it in full and closing the account
A low credit score can make it difficult for you to get your loan or credit card applications approved. You can take the following steps and adhere strictly to it to improve your credit score again:
- Start paying your loan EMIs and credit card bills on time. Do not miss payments under any circumstances.
- Reduce your excessive dependency on credit and try to reduce your credit utilization ratio, especially if you max out your credit card limit regularly
- In case of errors in your credit report, get it rectified at the earliest from the credit bureau. For this, you should check your credit score online regularly through Paisabazaar and if there’s a fall, do check the report for errors.
- Avoid applying for multiple loans or credit cards very frequently. It is advisable to wait for six months from availing the latest credit instrument before you apply for credit again.
- Avoid closing your oldest credit card. A longer credit history helps lenders take credit-related decisions with more confidence.
- Keep a good mix of secured (eg. home loan, car loan, etc.) and unsecured credit (personal loan, credit card, etc.) in your profile.
- Seek expert advice from Paisabazaar’s Credit Advisory Services to improve your credit score significantly.
Apart from the fact that Paisabazaar.com offers CIBIL score report for FREE with monthly updates, you can also check, monitor and compare your credit scores from other credit bureaus like Experian, CRIF High Mark and Equifax. Paisabazaar helps you check, track and build your score by enabling you to:
Check your credit score seamlessly: Through Paisabazaar.com (web & app), you can check and compare your credit score from multiple bureaus, including CIBIL, instantly and for absolutely free. Since it's a completely digital instant process, you can access your latest credit score in a few seconds from anywhere, anytime for absolutely free.
Get customized offers: Those with healthy credit profiles can also check and avail the best pre-approved loan and credit card offers from India's top banks and NBFCs. These offers come with no/minimum documentation and usually have instant disbursals and issuance. Through Paisabazaar's unique ‘Chances of Approval’ feature, you will be matched with the most suited lender and offer for personal loans, on the basis of your CIBIL score along with other eligibility factors. This will help you apply for the right offer from the right lender, minimizing the chances of rejection of your loan application.
Build your credit score: To improve access to formal credit, Paisabazaar also offers a personalized credit advisory service that helps customers understand their credit report and improve their CIBIL score or credit score. Paisabazaar also provides an exclusive credit health report, with deep analysis and insights. You can also begin your credit journey and improve your score by taking an exclusive credit builder product - Step UP Credit Card - from Paisabazaar.com
Q. Why does my CIBIL score keep changing?
Ans. Any change in any of the credit score factors can bring a change in your CIBIL score. Thus, little-noticed factors, such as late payments and maxing out your credit cards, as well as more noticeable factors that include a new home loan or car loan can also change your credit score. Also, if you keep applying for new loan or credit card often, it is perceived as credit-hungry behaviour and can reduce your credit score. One should, hence, avoid making too many new applications for credit within a short span of time.
Q. I have a high salary and low credit utilization ratio but I was denied the loan. Why?
Ans. A lender first looks at your credit score while considering your application for a loan. If your credit score is low, your loan application can get rejected even if you have high salary or low credit utilization ratio. You should check your credit score free online to see the reason behind a poor score.
Q. I have an 800+ credit score and the credit utilization ratio is well below 10% but I was denied a new credit card. Was this because I took a personal loan last month?
Ans. Applying for a lot of credit products in quick succession represents you as a credit hungry person. So, many banks do not approve your loan or credit card application, even if you have a high credit score and low credit utilization ratio.
Q. What is the minimum CIBIL score to get a personal loan?
Ans. The minimum CIBIL score for personal loan required for approval varies from one lender to another for unsecured loans such as personal loans or business loans. However, if your CIBIL score is 750 and above, it becomes relatively easier to get the loan approved. Many lenders approve personal loan applications even if the CIBIL score is 700 but they may have to pay high interest on the loan.
Q. Can everyone access my CIBIL Score?
Ans. No. Your CIBIL score is confidential personal information that only you or a few authorized entities (on your consent) are allowed to access. These authorized entities can access your credit report only under specific circumstances, for instance, when you apply for a new loan or credit card. Some authorized entities that can access your CIBIL score/report include financial institutions and banks, who are trusted CIBIL members.
Q. How to check CIBIL score for free?
Ans. You can check your CIBIL score for free every month through Paisabazaar.com which is one of the best platforms to check credit score online from various credit bureaus.
As per the RBI’s directives, the credit bureaus shall give access to FFCR (Full Free Credit Report) once a year to everyone whose credit information they hold. You can request for your free credit report anytime once in a year from CIBIL’s official website.
Q. What are the steps to check credit score on Paisabazaar.com?
Ans. Checking your credit score free on Paisabazaar platform is a convenient and hassle free process that takes not more than 2 minutes. All you have to do is to follow the below steps to access your free credit score online and detailed credit report.
- Click on Get Free Credit Report tab at the middle of the page and Login with OTP by entering your mobile number, for existing customers
- For new customers you can enter the basic details like Name, Mobile Number, PAN Card, etc. and click on submit
- Enter the verification OTP received on your mobile number
- After verification you will be redirected to Credit Score Dashboard
On Credit Score Dashboard, you will see your latest credit score along with other details related to your credit report like active account, payment history, new enquiries, detailed credit report, etc. Along with that, you will also see the pre-approved loan and card offers available for your account as per your eligibility criteria.
Q. How often can I get an updated credit score?
Ans. You can apply for a credit report any number of times, however, as lenders report your CIBIL score information only once a month, you might not observe any change in your credit score before an interval of at least 30-45 days.
Q. How did CIBIL know about my loans and credit cards?
Ans. All banks and NBFCs are CIBIL members and provide details of loans and credit card repayments to CIBIL on a monthly basis. When you request the credit report, CIBIL accesses these details and calculates the score based on the data provided by the members. The same logic holds true for credit scores prepared by other 3 leading credit bureaus, such as Experian, Equifax and CRIF High Mark.
Q. Would checking my CIBIL Score lead to its decrease?
Ans. No. If you check your credit report or CIBIL score, it is considered to be a “soft inquiry” and this type of check does not affect your CIBIL score in any way. This holds true even if you’re checking other credit bureau’s credit scores or reports. However, the “hard inquiries” made by banks and financial institutions for your credit report affects your credit score.
Q. Does CIBIL Score affect my chances of getting a new loan or credit card?
Ans. At present, your credit score, whether reported by CIBIL, Experian, Equifax or CRIF High Mark, is one of the key factors that determine your eligibility to get a new credit product. Different banks and NBFCs have different cut-off criteria in providing new credit products.
Maintaining a good credit score (closer to 900) definitely improves your chances of getting approvals on additional credit products. However, CIBIL score (or credit score) is not the only criteria that determine a person’s eligibility to secure new credit. Lenders also take into account other factors like your debt to income ratio, credit and employment history, their own internal criteria, etc. before making lending decisions.
Q. What is the minimum CIBIL score required for any type of loan?
Ans. There is no evident data available at present regarding the minimum, good or high CIBIL score for getting loans or credit cards. The discretion of providing approvals on loans or credit cards solely depends on banks, NBFCs and financial institutions. However, a credit score of 750 and above is usually preferred by the lenders for approving a credit application.
Q. How do I increase/improve my CIBIL Score?
Ans. CIBIL score is based on your credit history and it cannot be increased overnight, no matter what a self-styled CIBIL score improvement agency might tell you. It starts with paying your credit card dues and EMIs on time, while also requiring you to minimize your outstanding debt.
Q. Why is a credit card account that I already paid off and closed still on my report?
Ans. Your current lenders report your loan/credit card status to CIBIL periodically and these details get reflected in your report over time. Therefore, if you close out a loan or credit card account this month, it might still reflect in your credit report.
Q. What happens if my CIBIL Report has errors?
Ans. In case you find errors in your CIBIL report, like incorrect mention of default in repayments, wrongly assigned loans/credit cards, errors in personal information, etc. you can request CIBIL to correct it through their Consumer Dispute Resolution procedure. As part of this process, you will be required to submit supporting documents, such as bank NOC, loan settlement letter and also a nominal fee to get your records updated. Please note, these errors in your credit report may have a minor impact on your credit score, thus it is advisable to get them corrected at the earliest. You can reach out by opting for below mentioned customer care information, along with corporate address.
CIBIL Helpline Number – (+91) 22-6140-4300
Timings: Monday to Friday between 10:00 AM to 06:00 PM
Email Id : email@example.com
TransUnion CIBIL Limited (Formerly known as Credit Information Bureau (India) Limited)
One Indiabulls Centre, Tower 2A, 19th Floor,
Senapati Bapat Marg, Elphinstone Road,
Mumbai - 400013
Q. Can CIBIL delete or change my credit score information on its own?
Ans. No. CIBIL does not have the authority to delete or make changes to your credit report on its own. They are only involved with collating the data as provided by the member banks and NBFCs. In cases of credit report disputes, CIBIL will make changes to your credit report provided there is sufficient documentary evidence to show that an error has actually occurred. However, the concerned banks or NBFCs will have to provide the necessary clearance before CIBIL makes such changes.
Q. What does “New to Credit” mean?
Ans. Your CIBIL score is calculated on the basis of your credit history. So, if you have never taken any credit product like a loan or credit card, CIBIL will assign you a “New to Credit” tag, which means you have no credit history. It becomes difficult for the lender to determine the risk category you fall into in case you have never taken a loan or never had a credit card.
Q. I have signed as a guarantor for someone else’s loan. Will that impact my credit score?
Ans. Becoming a guarantor for someone else’s loan makes you liable to pay the loan in case he/she fails to do so. The guarantor’s CIBIL score is impacted in case he/she fails to repay a loan where the primary borrower has already defaulted.
Q. What is the difference between CIBIL Report and CIBIL Rank?
Ans. The difference between the CIBIL report and CIBIL rank is given below:
A historical record of the repayment of all loans and credit cards
A historical record of the repayment of all loans of a business
Credit score ranges between 300 and 900
Credit rating is denoted by numbers 1 to 10
A score closer to 900 is preferred when seeking new credit
Companies with credit rating 1 are the most preferred borrowers while those with credit rating 10 are the least preferred.
Q. What is the difference between credit rating and credit report?
Credit report or credit score is applicable for the individuals, which is provided by the fur credit bureaus available in India, namely, CIBIL TransUnion, Experian, Equifax or CRIF High Mark. Credit rating on the other hand is provided by CRISIL, ICRA, etc. and is applicable for companies and organizations.
Q. How to download CIBIL Report?
Ans. When you check your credit score on Paisabazaar, you get scores from multiple bureaus. Your CIBIL report is provided on the dashboard where your CIBIL score is published. You can download your CIBIL report from here and use your DDMMYYYY as the password.
Q. Is CIBIL Score of 750 considered good?
Ans. Maintaining a Credit Score of 750 and above is generally considered good as it depicts that you have shown discipline while handling your finances and it also makes you a credit worthy customer. A good CIBIL Score of 750 and above also improves your chances to get approved for credit products like loans and credit cards.
Q. Can I check my Credit Score through Aadhar Card?
Ans. You can provide your Aadhar Card as an ID proof while checking your CIBIL Score, but it is not possible to check your credit score using Aadhar Card only. You need to provide your PAN card to check your credit score from any credit bureau in India as your CIBIL Score is directly linked to your PAN card
Q. How can I check my credit score for free through my mobile number?
Ans. At Paisabazaar.com all you need to do is to provide your mobile number to check your updated credit score for Free. Once you will enter your mobile number, you will receive n OTP for login/verification, once verified, you will be redirected to your credit score dashboard where you will be able to see your credit score with detailed credit report and other pre-approved loan and card offers for your profile.
However, if you are first time customer on Paisabazaar, then you will be required to provide other details like Name, PAN, Address, Mobile Number, etc. to get your credit score report for the first time that too for free.
To get your credit score report through mobile number, you need to make sure that the number you are using is linked with your PAN card.