What Distinguishes CIBIL Score from CIBIL Report?

Loans give borrowers quick access to a substantial amount of money that they can use to fulfil their various needs. It is, therefore, not very surprising that the popularity of various loans as financing tools is increasing constantly. However, the affordability of any loan and how easy it will be for the borrower to repay it depends on the interest rate offered on the loan as well as other loan terms and conditions. Lenders decide the terms and conditions of a loan, such as the interest rate to be offered, the loan amount to be sanctioned and the tenor of the loan, after looking at a borrower’s credit score and credit report. Borrowers often have no clarity on the difference between a CIBIL score and a CIBIL report. This article aims to solve this problem. 

What is a CIBIL Score?

The CIBIL score is a three-digit number that represents a borrower’s creditworthiness and repayment capacity. It denotes the risk involved for the lender in lending money as well as the likelihood that a borrower will default on loan repayment. CIBIL scores range between 750 and 900, with 900 being the best CIBIL score anyone can have. In general, lenders consider anything above 750 an excellent credit rating. Borrowers who pay their EMIs on time, never default on loan repayment, maintain a low credit utilization ratio, apply for credit and loans only when needed and in general, have a very responsible attitude towards credit have such a CIBIL score.  

In India, borrowers often use the words ‘credit score’ and ‘CIBIL score’ interchangeably. However, the two are not the same. In India, four credit information agencies are authorized by the Reserve Bank of India to collect data on borrower behaviour and their attitude towards credit. These are Experian, Equifax, CRIF Highmark and TransUnion CIBIL. All of these credit information bureaus assign borrowers their credit scores. However, TransUnion CIBIL is the most famous of these bureaus and the credit score it assigns to borrowers is known as the CIBIL Score. Let us further understand what the CIBIL report is and how it varies from one's CIBIL score.  

What is a Credit Report and How is it Different from a Credit Report?

Unlike a credit score, which is a number, a credit report is a statement. It contains details of a borrower’s credit activities, the number of loans they have taken so far, the number of loans they have already repaid, their existing debt situation, loan and credit card repayment history, current credit utilization ratio, etc. Credit card reports also contain details on more important and serious matters, such as details of missed EMI payments, cases of loan default, bankruptcy and tax liens, etc. All borrowers have more than one credit report and it is based on everything mentioned in the credit report that a credit information agency assigns borrowers a credit score. Credit information bureaus build credit reports based on the information provided to them by lenders and financial institutions.  

Before applying for a loan of any type, like a Home Loan or Loan Against Property, borrowers must do a free CIBIL score check. 

How do I Know My CIBIL Score or Credit Score?

If you are planning to apply for a loan of any kind, secured or unsecured, you must check your CIBIL score at least six months before beginning the application process so that you have ample time to take corrective measures in case your CIBIL score does not meet your lender's eligibility requirements. Wondering how to check CIBIL score online? Simply follow these steps: 

Go to the official website of CIBIL and click on 'Get Your CIBIL Score.'

During the next step, you will be required to provide details, such as your name, email address, phone number, date of birth, phone number, PIN Code, etc. After you do this, click on 'Accept and Continue'.  

Next, you will receive an OTP on your phone number. Enter the OTP and select 'Continue'. 

Next, select 'Go to dashboard' and check your credit score. Once you do this, you will be taken to myscore.CIBIL.com Click on 'Member Login', log in to your account and you will be able to see your CIBIL. 

Also Read: How to Check, Calculate, and Improve CIBIL Score?  

Tips on How to Maintain a Good Credit Score

Your credit score depends on several different factors. Based on the factors that affect your credit score, here are a few tips that will help you maintain a good CIBIL score.  

• Your repayment history makes up 35% of your credit score. Therefore, if you want to maintain a good CIBIL score, make it a point to clear all credit card bills and EMIs on time. If you have too many loans which makes it difficult for you to keep track of EMI due dates, authorize your bank to do auto-payments. If for some reason, you miss an EMI, make it a point to clear it as soon as possible.  
• Maintain a healthy mix of credit. In other words, have both secured and unsecured loans. This will convince your lender of your ability to handle all types of credit.  
• Do not exhaust your credit cards. Borrowers who exhaust the limit on their credit cards are seen as risky borrowers by lenders and credit information agencies. Such borrowers, therefore, have low credit scores. To maintain a good CIBIL score, do not exhaust the limit on your credit card. Further, maintain a low credit utilization ratio of under 30%.  
• New credit card and loan applications lead to hard enquiries. Every time a lender pulls out a borrower's credit report, a hard enquiry gets registered in the borrower's name. Too many hard enquiries show a borrower to be credit hungry and reduce their CIBIL score. Thus, if you want to improve and maintain a good CIBIL score, make it a point to apply for loans and credit cards only when necessary. Further, if you are applying for too many loans and credit cards, spread out your applications over the months.  
• Lastly, if you want to maintain and improve your CIBIL score, check your CIBIL report for errors from time to time. If you see any errors that are bringing down your CIBIL score, report them immediately. 

Final Words

Borrowers and credit card users must have a very clear understanding of how their credit score and credit report affect their ability to avail of credit in future as well as the factors that affect their credit score. After all, when a borrower knows the factors that affect their credit score and report, they make better decisions regarding how they use credit.

Also Read: Best Credit Score for Home Loans and How to Improve Yours