What Distinguishes CIBIL Score from CIBIL Report?

Loans have become viable financial tools, giving borrowers quick access to a substantial amount of funds that they can use to fulfil various requirements. However, the feasibility of any loan depends on the interest rate offered on the loan as well as other loan terms. 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 assessing the borrower’s credit score and credit report. This article aims to differentiate between credit scores and reports. 

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 funds as well as the likelihood of a borrower defaulting on loan repayment. CIBIL scores range between 750 and 900, with 900 being the highest CIBIL score anyone can have. In general, lenders consider anything above 750 as an excellent credit rating. Borrowers who pay their EMIs on time, never default on loan repayment, maintain a low credit utilisation 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 authorised to collect data on borrowers' behaviour and their attitude towards credit. These are Experian, Equifax, CRIF High Mark, and TransUnion CIBIL. All of these credit information bureaus assign borrowers their credit scores. However, TransUnion CIBIL is the most preferred 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 Score?

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 repaid loans, their existing debt situation, loan and credit card repayment history, current credit utilisation ratio, etc. Credit card reports also contain details of missed EMI payments, cases of loan default, bankruptcy, and tax liens. 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 should 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 should check your CIBIL score 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 your CIBIL score online? Simply follow these steps: 

1. Go to the official website of CIBIL and click on 'Get Your CIBIL Score.'
2. 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'.  
3. Next, you will receive an OTP on your phone number. Enter the OTP and select 'Continue'. 
4. Next, select 'Go to dashboard' and check your credit score.
5. Once you do this, you will be taken to myscore.CIBIL.com.
6. Click on 'Member Login' to log in to your account. 

Once you have logged in, you will be able to see your CIBIL score. 

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

Tips on How to Maintain a Good Credit Score

Your credit score is affected by several factors. Based on these factors, 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 several loans, it can be challenging to keep track of EMI due dates. Consider authorising your bank to make automatic payments to avoid defaulting on your repayment. If you happen to miss an EMI for any reason, ensure that you pay it off as quickly as you can.
• 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 utilisation ratio of under 30%.  
• New credit card and loan applications lead to hard enquiries. Every time a lender assesses a borrower's credit report, a hard enquiry gets registered in the borrower's name. Too many hard enquiries show 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 causing a decrease in your CIBIL score, report them immediately. 

Final Words

Borrowers and credit card users should have a 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. This will enable them to make more informed choices about their credit usage.

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