TransUnion CIBIL Ltd., earlier known as Credit Information Bureau Ltd., is among the leading credit information companies in India. Incorporated in 2000, it is popularly known as CIBIL credit bureau. The bureau gathers and maintains records of your payments related to credit products such as loans and credit cards. Lenders, financial institutions like banks and non-banking finance companies submit your credit records to CIBIL every month. The credit bureau uses this information and computes your CIBIL score and creates a detailed credit report. Lenders use this report and score to measure your creditworthiness and assess whether you can repay the borrowed amount.
This bureau is licensed by the Reserve Bank of India (RBI) and is overseen by the Credit Information Companies (Regulation) Act of 2005. It has more than 2,400 members including banks, financial institutions, non-banking financial companies, and housing finance companies. The credit bureau maintains credit records of more than 550 million consumers and businesses.
What is a CIBIL Score?
A CIBIL score is a 3-digit number that represents your creditworthiness. It ranges from 300-900. The closer your score is to 900, the better the chances are of you getting a loan or a credit card approved. A higher score suggests you have been a responsible borrower and have a good credit history. As per general standards, a score of 750 and above gives you quicker access to loans and credit cards.
There are four main factors that make up the score:
| Payment History |
30% |
| Credit Exposure |
25% |
| Credit Type and Duration |
25% |
| Other Factors |
20% |
What are the Factors that Affect my CIBIL Score?
One of the biggest factors that affect your CIBIL score is payment history. You should make it a priority to pay your credit card bills as well as loan EMIs on time. Avoid late payment of bills at any given time as it will bring down your score. As per a recent CIBIL analysis, a 30-day delinquency can reduce your CIBIL score by 100 points (as reported by Financial Express).
The total amount of debt you have at a given point of time has a major effect on your CIBIL score. The credit utilization ratio is the amount of credit used by you in proportion to your combined credit limit. You should maintain a low credit utilization ratio at all times to get a high score. As per experts, it is advised to use only up to 30% of your total credit limit.
A long credit history helps to improve your score. It suggests that you have a good experience with handling credit. Lenders prefer offering credit to people who have a rich history because it makes assessing you as a borrower, easier. Therefore, it is advised to avoid closing old cards as you will lose out on the long credit history and good repayment behavior associated with it.
It is important to have a decent credit mix. Maintaining a healthy balance of secured and unsecured credit helps to boost your CIBIL score. You need to make sure that you don’t have high secured credit or unsecured credit and instead try and maintain a good balance of both.
Avoid making multiple credit inquiries within a short period of time. When you inquire to a bank or a financial institution about a loan or a credit card, the lender will pull out your CIBIL report. Such an inquiry is called a “hard inquiry” and it has a negative impact on your score. Multiple credit inquiries can bring your score down. Therefore, it is advised to inquire for credit only when you actually need it. Meanwhile, when you check your own score or report, it is called a “soft inquiry”. You can check your report multiple times and it will not have any effect on your CIBIL score as soft inquiries are not recorded on your report.
- Payment History:
- Total Amount of Debt:
- Length of the Credit:
- Type of Credit and Duration:
- Total Credit Inquiries:
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