In 2000, First ever credit bureau was established in association with a US credit bureau Transunion for Helping individual with their credit scores and credit reports. CIBIL Transunion established it’s marked by providing the scores to individuals who had taken loans and credits. CIBIL (Credit Information Bureau India Limited) was widely chosen by the banks and NBFCs(Non-Banking Financial Institutions) and helped it get the details of borrowers in order to get a better management system for credits. And also made it easy for a financial institution for the reference check in order to know the creditworthiness of an individual and eventually even companies.
CIBIL report then became an important aspect in each individual’s and even financial institution’s life. As stated above, it became easier for anyone to know past payment history, the amount owed, credit mix, length of credit histories and new credits they have applied for. And these are exactly the five parameters which make the score. Let us now understand the basic difference between CIBIL Score and CIBIL Report. CIBIL score is a three-digit number ranging between 300-900 where 900 is is considered as highest and 300 is to be the lowest. The creditworthiness is checked by the range of the score. Any score between 300-600 is considered lowest, any score between 600-750 is average and 750+ is highest. The score is this and the credit report has the detailed information of Individual. Starting for a score, personal details like Name, Address, Email, Mobile Number, PAN card, Aadhar Card etc. With that, it has detailed information about the credits that have been taken. From the time the credit account has been open, till it’s repayments and also when it was done and ending details. If any defaults, missed or delayed payments, are also mentioned in the report. Along with this, the last segment has details of all the credit inquiries that have been made till date. Credits here consists of credit cards and the loans both!
A Healthy report is the one which has the score 750+ as a start. All the personal information correct and verified. Major of the credit account with the status as closed and not settled of the one which is completed. The once which are open should have proper payment history i.e. no missed or delayed payments. Not too many new credit inquiries in a short span of time as that show a credit hungry behavior. Everyone should understand that nowadays all the financial institutions check the report and the score before sanctioning the loans or the credits or the credit card limits. If major of the above-mentioned criteria are fulfilled even the lenders are happily sanctioning the loan as that is like a low-risk profile for them. If suppose the score is low, or there are previous missed and delayed payments, too many of accounts settled, then that gives the impression to the lender as the borrower is not a responsible one and if the new credit or the loan is approved for him, that can straight away be a risky thing as he or she might repeat the same mistakes as done earlier and hence the credit may go on toss!
After knowing the fact of chances of getting a loan in an easier manner, know the fact that when the score is good and a report is healthy it is also added to the fact that the interest rates are lower. Suppose a person with 750+ score is planning to take a personal loan and a person with 650 score is planning to take a personal loan then there will be a minimum of 1%-2% difference in the Personal Loan Interest Rate. And sometimes even more. So be wise and always try to maintain your credit score and report healthy!