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Difference Between Credit Score and CIBIL score_WC

5 min 17 Feb 2023
Difference Between Cibil Score & Credit Score
Highlights:
  • What is a Credit Score?
  • What is CIBIL score?
  • Merits of a Good CIBIL or Credit Score
  • CIBIL Score vs Credit Score: Which is More Important?

If you have ever taken a loan or have even applied for one, your lender must have asked for your ‘CIBIL score’. Yet others must have asked for your credit score. So why are these terms used interchangeably? If credit score is what matters, why do we check CIBIL score then? Very few people know the difference between these two, if at all there is. In this article, we take a detailed look at how CIBIL score and credit score are similar yet different. Read on to know more.  

What is a Credit Score?

The credit score is a numerical value that denotes an individual's creditworthiness and repayment capacity. In India, there are four credit information bureaus - Experian, Equifax, CRIF Highmark and TransUnion CIBIL. All these credit information bureaus collect information about a borrower's repayment history, debt situation, credit utilization ratio, etc. and based on this information, they are assigned a number between 300 and 900 to the individual, which is their credit score. The closer one's credit score is to 900, the better are their chances of loan approval and getting a loan on good terms and conditions. 

Also Read: Ways to Improve Your Credit Score with a Credit Card 

All four of the information bureaus assign a numerical value to the borrower and this value is known as credit score. 

Let us now try to understand what is CIBIL score.

What is CIBIL score? 

As mentioned before, there are four credit information bureaus in India - Equifax, Experian, CRIF Highmark and TransUnion CIBIL. Of this, TransUnion CIBIL is the most popular and is used by most lenders and financial institutions in this country. TransUnion CIBIL assigns a numerical value ranging between 300 and 900 to everyone that denotes their creditworthiness and repayment capacity. This number is known as CIBIL score. 

Also Read: What is CIBIL? Understand How It Works & Its Importance 

To summarise, CIBIL score is a subset of credit score - the only notable difference being credit score can be provided by any of the credit bureaus but only TransUnion CIBIL offers your CIBIL score. 

Merits of a Good CIBIL or Credit Score

If your credit or CIBIL score is 750 or above, all lenders would want to have you as their client and try to entice you with good loan deals. Such a score indicates high creditworthiness and excellent repayment capacity. Thus, individuals whose credit or CIBIL score falls under the excellent category get approved for a loan quickly. 

Read Also: 7 Proven Methods to Increase Your CIBIL Score Above 800

CIBIL Score vs Credit Score: Which one is More Important?

Both credit score and CIBIL score are used by lenders to assess the risk involved in lending money to a borrower. They are both numerical values ranging between 300 and 900. The only difference is that while an individual can be assigned a credit score by any of the four credit information bureaus in India, the CIBIL score is only assigned by TransUnion CIBIL.  

If you are planning to apply for a Home Loan, check your credit rating first. Apply for a loan if your credit score meets the loan eligibility criteria. If your credit score is not up to the mark, work on bettering it first and then apply for a loan.

Also Read: Know How to Check Your  CIBIL Score

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