r credit score is a rating that is given to you based on your creditworthiness in the market. This score is a reflection of how diligent you have been in clearing your outstanding debts and how religiously you have paid your monthly EMIs/stipulated payments.
If you want to apply for a loan or credit card, the financial institutions will certainly refer to your credit report, as they rely on it heavily to evaluate and understand your payment behaviour.
Meaning and Categorisation of CIBIL Scores
CIBIL score is ascertained by Credit Information Bureau (India) Limited, one of the most trusted regulated agencies that publishes your credit score.
Established in 2000, CIBIL India is a part of the American multinational group TransUnion and is one of the primary bureaus that major financial institutions depend on. It is directly regulated by the RBI’s Department of Banking Operations and Development.
According to CIBIL, Experian, or any other credit agency, your credit score is between 300 and 900.
This score depends on your repayment history, CUR (Credit Utilisation rate), Credit Mix, and outstanding and new debts. When you apply for a credit card or loan, financial organisations refer to the CIBIL score before approving your applications and offering an interest rate.
Let’s look at the categorisation of CIBIL Scores:
- Between 750-900 – Excellent Scores
- Between 700-750 – Good Scores
- Between 650-700 – Average Scores
- Between 550-650 – Below-Average Scores
- Between 300-550 – Poor or Bad Scores
If you have a good or an excellent CIBIL score, you get the following advantages:
- Quick approvals and disbursals of loans of all kinds and credit cards
- Lower Rate of Interest
- Betters offers, deals, and discounts
- Pre-approved loan offers
- Extension of Credit card limits
Factors that Affect Your CIBIL Score
Given below are some of the most critical factors that impact your credit rating:
Repayment History
Your credit score is mainly affected by how religiously you pay your dues. Whether it is about paying monthly loan EMIs, or your credit card payments. Any missed or delayed payment can result in a negative markdown on your credit rating.
CUR
Credit utilisation ratio or CUR is the ideal credit limit on your credit card that you must ideally use. For example, if your credit card comes with a limit of Rs. 1 lakh and you have used Rs. 40000, then your current CUR is 40%. Keeping your CUR to 30-40% is recommended so your credit rating is well maintained.
Credit Mix
Having a financial credit mix of both secured and unsecured credit in your corpus pushes your credit score higher. Thus, whenever you consider taking loans, try and maintain a balance of both kinds of loans.
New Applications
When your credit score is high, waiting for pre-approved loans and credit offers is recommended so you are empowered to grab the best deal. If you apply on your own or multiple platforms, it can affect your credit rating and may lead to rejections.
A credit score inquiry by a financial institution is termed a hard inquiry that makes your credit score slightly low temporarily. If you check your score, it is a soft inquiry and has no impact on your credit rating.
Longer Tenures
Any loan that is taken for a longer period ensures a loyal and reliable relationship with the financial institution. This also means that you can prove your credibility and strengthen your relationship with the provider if you make all payments on time.
Why Should You Check Your CIBIL Score?
Checking your CIBIL score is highly recommended for the following reasons:
- You can check for errors, duplications, omissions, or negative updates on your credit score and can immediately report it for credit score corrections
- You must keep a check constantly, especially if you are applying for a loan or credit card, as you can track your score and make efforts to enhance it.
- You can make better comparisons between different loan and credit providers and grab the best offer.
How to Check Your CIBIL Score in 2 Minutes?
Simply follow these steps and check your CIBIL score anytime, anywhere within 2 minutes:
Step 1 – Login to the CIBIL website and click on ‘my CIBIL score free’ or CIBIL login free on a financial app like OneScore: Credit Score Insight App. You can check your Experian & CIBIL score here.
Step 2 – Punch in your details like name, address, contact details, and PAN Card number
Step 3 – The portal will reflect your current CIBIL score
Step 4 – If you have a credit score between 700-900, it signifies a high score, and you can grab the best offers and deals on loans and credit cards. A score between 650-750 is considered average, while a score less than 650 is considered poor or below average.
Conclusion
Your CIBIL score is a mark of your credibility in the financial market; thus, you must make every possible effort to build and maintain it. It is essential to keep a check on your score now and then so that you can take appropriate measures to boost your credit score.
