CIBIL (Credit Information Bureau (India) Limited) is India’s first credit information company, established in August 2000. It collects and maintains credit information of individuals and companies from its member banks and credit institutions, and creates credit reports that are used by banks and financial institutions to evaluate creditworthiness and risk.
CIBIL Score is a three-digit numeric summary of an individual’s credit history that is derived from the credit information report maintained by CIBIL. This score ranges from 300 to 900, where a higher score indicates a better credit history and creditworthiness.
The CIBIL Score is calculated based on several factors, including:
- Payment history: The repayment history of past loans and credit card bills is the most critical factor in determining the CIBIL Score. Late payments or defaults negatively impact the score.
- Credit utilization: The amount of credit utilized compared to the available credit limit is another important factor in determining the score. High credit utilization can negatively impact the score.
- Credit mix: The mix of secured and unsecured loans, as well as credit cards, can impact the score. A healthy mix of credit types can positively impact the score.
- Credit inquiries: The number of inquiries made by lenders when an individual applies for credit can impact the score. Too many inquiries in a short period can negatively impact the score.
CIBIL Score is used by banks and financial institutions to evaluate an individual’s creditworthiness and risk while offering credit. A higher score indicates a lower risk of default and may lead to better interest rates and credit terms.
It is important for individuals to maintain a good credit history and keep track of their CIBIL Score regularly. They can check their CIBIL Score and credit report online by visiting the official website of CIBIL and paying a nominal fee. By monitoring their credit history and taking steps to improve their CIBIL Score, individuals can increase their chances of getting approved for credit and enjoy better credit terms.