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. CIBIL score and CIBIL report are some of the frequently used terms in the financial world. It is essential to know the meanings of these terms and the difference between them when you are planning to apply for a Home Loan or a Loan Against Property.
What is a CIBIL Score?
A CIBIL score is a three-digit credit score assigned by the TransUnion CIBIL. This number represents a person's credit behaviour based on their credit history. A credit score ranges from 300 to 900. This score also determines if an applicant's loan application will be approved or rejected. Any score above 750 is considered an ideal CIBIL score and it helps in evaluating your creditworthiness. 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 such as your repayment history, credit utilisation ratio, debt-to-income ratio, and the mix of credit types.
What is CIBIL Report?
A CIBIL 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 including their PAN number, date of birth, place of residence, and 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 insights into an individual’s credit history and helps assess the risks associated with extending loans. It is important to have a good CIBIL report to be eligible for favourable credit.
A person’s CIBIL credit report may have the following details:
- Personal data such as name, gender, and date of birth
- Contact information such as place of residence, mobile numbers, and email addresses
- Employment information
- Account information such as number of accounts, loan settlement, unpaid debt, credit card details, and credit card cancellation details
- Enquiry information
Also Read: Importance of a Credit Report
Difference Between CIBIL Score and CIBIL Report
Now that you know the meanings of these terms individually, it is essential to determine the difference between a CIBIL score and a CIBIL report. The table below explains the differences comprehensively:
| 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. | It consists of a person’s credit history, repayment history, the number of credit accounts, the amount of credit used, and any defaults or late payments made. |
| It is a numerical summary derived basis your credit information. | It 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 should do so.
Improving your credit score is essential for securing better loan terms, lower interest rates, and increased financial opportunities. an ideal credit score of 750 or above can help you avail of any loan at feasible terms. It can take several months to see a noticeable impact on your credit score when you decide to increase it. To improve your CIBIL score you need to keep in mind a few things:
- Pay your dues on time
- Keep your credit card utilisation ratio low
- Avoid applying for multiple loans simultaneously
- Monitor your credit report
- Keep old credit accounts open
The above tips can help you build a good credit score for your loan approval.
