All you need to know about CIBIL and CIBIL Report!

What is CIBIL?

You all must have seen this word in your spam emails or heard about it while applying for a loan. What actually is this CIBIL? Imagine a school admin office where the record of every student is maintained. The information of every student is sent by the financial team(who collects the fee of students) to the admin office of the school.

Just like this, CIBIL is also an institution or a bureau in particular where they store credit-related information of everyone. Now, this information is sent by some registered member banks and other financial institutions(FIs) usually on a monthly basis. The CIBIL issues a credit report(CIR) and a credit score based on this data.

TransUnion Credit Information Bureau of India is a company which was founded in 2000 and securing the credit files on 600 million people and 32 million businesses. CIBIL has not only enhanced the growth of credits but has successfully provided technology to avail superior information and high-quality support services with its highest security standards.

It is interesting to know that CIBIL has no say when it comes to taking lending decisions. It just acts as a database where anyone can find the credit-related information, be it a bank or any other lender.

What is a CIBIL Report?

CIBIL report is like a report card which consists of all the loan payment history of an individual. It mainly describes your details of loans in the past years, enquiries made for loans, credit card application made, missed or delayed payments of loans or credit cards, current loans, current credit cards and the total credit limit or any such information related to credit card or loan. There is a 3-digit numeric value which is often called CIBIL Score on CIR(Credit Information Report). The CIBIL report displays all your payment of loans and credit card payments you have done till date. Banks and other lenders use it as a universal platform to decide your credit-worthiness. It is important to note that the CIBIL report doesn’t include the details of your fixed deposits, investments or savings accounts. The CIBIL score ranges from 300-900 where 900 is considered as the best number and strengthens your part to avail the credit. Usually, 700 is regarded as the minimum score to justify your creditworthiness.

Why is CIBIL Report Important?

CIBIL report is the proof to prove your authenticity before taking up or requesting for a loan. It evaluated your credit-worthiness by putting up all your credit history in front of the lender before making any lending decision. Four authorised credit bureaus issue it in India namely CIBIL, Experian. CRIF High Mark and Equifax. The CIBIL report is essential because:

It gives clear insight into the past and current credit borrowing and repayment history of the concerned individual. This would help the lenders to decide whether to lend him/her or not.

It helps the individual to keep a check on the credit score and increase it in case it doesn’t meet the criteria of good one.

It plays a major role when it comes to availing a loan. It is the most unambiguous representation of an individual’s history and it makes it easy for both the parties to get convinced about lending and borrowing decision.

How to Improve your CIBIL Score?

If your CIBIL score is hampering you from taking up any loan, don’t worry about it. What’s done in past is gone. Now, buckle up to improve your CIBIL score.

  • The number of credit cards you have, the lesser will be your CIBIL score. Wisely decide this case as it may show your hunger for credit. The critical fact which people miss out is that they should not cancel their old cards. This would give a negative impact and lower down your score in return. Make minimum use of existing cards.
  • Never miss any payment while repaying your debts. It depicts your, and the negative may decrease your CIBIL score.
  • Use the credits judiciously, whenever you can. Try to use less than 50% of your total credit limit. It would help you to reduce your expenses.
  • Check your CIBIL report carefully. If you see any error or mistaken entry, get it corrected right away.
  • Set up payment reminders in your phone. The market is flooded with reminder apps these days, make use of it and never delay your payments.
  • Keeping the credit card limit low would help to restrict you from any extra expenses.
  • We can always desire more, but it is vital to think about what is necessary and what is a waste. The credit cards, loans all give you temporary happiness but always keep in mind the repayment scenario. If you think you can timely repay your debts, this will help your CIBIL report and CIBIL score. The better your CIBIL report is, the better are the chances for your loans.

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