When it comes to managing your finances, understanding your credit history and creditworthiness is essential. In India, the Credit Information Bureau (India) Limited (CIBIL) is one of the major credit bureaus that collects and maintains credit-related information of individuals and businesses. Talks about CIBIL score and CIBIL report are very common when you are learning more about the finance world. It is crucial to know the meanings of these terms and the difference between them when you are planning to apply for a Home Loan or Loan Against Property.
To understand them fully, continue reading the blog.
What is CIBIL Score?
A CIBIL credit score is a three-digit number which represents a person's CIBIL credit report based on their credit history. This score ranges from 300 to 900. A person’s loan application will be approved or not and whether they will be eligible for a loan or not, all depends on the credit score range. Any score above 750 is considered an adequate CIBIL Score and it helps lenders in evaluating and accepting your loan application. A low CIBIL score may still make you eligible for a loan, but you will likely face a higher interest rate on the borrowed amount. The way your CIBIL score is calculated depends upon many factors. The repayment pattern is taken into consideration. Your credit utilisation ratio, the debt-to-income ratio and the mix of credit types are also taken into consideration. This wide array of factors determines your three-digit numeric credit score.
What is CIBIL Report?
A CIBIL credit report, also called a Credit Information Report (CIR), is a comprehensive document that contains details about a person’s current and past loans, credit-related information, missed payments, financial behaviour and other data like their PAN number, date of birth, place of residence, gender. To produce a thorough CIBIL credit report, credit bureaus gather credit information from banks, financial institutions, and lenders. It is a detailed document that provides lenders with insights into an individual’s credit history and credit score. It is important to have a good CIBIL report to be eligible for credit.
A person’s CIBIL credit report may have the following details:
- Personal data such as name, gender, date of birth etc.
- Contact information such as place of residence, mobile numbers, and email addresses.
- Employment information.
- Account information: number of accounts, loan settlement, unpaid debt, credit card details, credit card cancellation details etc.
- Enquiry information.
So, it can be said that a CIBIL credit report is a comprehensive document of an individual’s financial behaviour that helps lenders, banks or financial institutions to assess the risks associated if they agree to lend a loan to the potential borrower.
Also Read: Importance of a Credit Report
Difference Between CIBIL Score and CIBIL Report
Now that you finally know the meanings of these terms individually, it is essential to determine the difference between a CIBIL score and CIBIL report. The table below explains it fully:
| CIBIL SCORE | CIBIL REPORT |
|---|---|
| A three-digit number that represents a person’s creditworthiness. A credit score is a part of the CIBIL credit report | A detailed report that contains a person’s financial history. |
| It is calculated based on a person’s credit history. | Not only a person’s credit history but also loan and credit card repayment history, the number of credit accounts, the amount of credit used, and any defaults or late payments made. |
| So, the CIBIL score summarizes information in a single number | Whereas a CIBIL report is a document of your financial activities |
How to Improve CIBIL Score?
Now that you know about CIBIL score, you might be wondering how to improve your CIBIL score and why you need to improve so.
Improving your credit score is a noble goal to have, especially if you plan to either apply for a loan to make a heavy purchase, like a new car or home. It can take several weeks, sometimes several months, to see a noticeable impact on your credit score when you decide to turn it around. To improve your CIBIL score you need to keep in mind a few things:
- Paying your dues on time
- Keeping your credit card balances low
- Do not apply for multiple loans
- Monitor your credit report
- Limit requests for new credit
- Keep old accounts open
All of these things will surely help you improve your credit score and build a good credit score for your loan approval.
