How to check your CIBIL Score for free?

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What is CIBIL? And What does it stand for?

CIBIL stands for Credit Information Bureau India Limited. It is a Credit Bureau that has been created along the lines of other nations where the use of credit cards and loans is relaxed, and thus, the Bureau keeps track of all the transactions where credit is taken from a registered institution such as banks. The Bureau is independent, international, and part of TransUnion, which is an American multinational group. It has records of 6000 lakh individuals and 320 lakh businesses. 

Two Main Branches of Operations

CIBIL Primary-Branched Objectives

ObjectiveDescription
Consumer Credit Reporting 
  • The Bureau collects consumer borrowing and payment information to understand and share risk profiles and set credit or interest rates. These scores are also used to find out unemployment decisions.
  • These records are headquartered internationally in Chicago
Business Credit Reporting
  • The same assessments and evaluations for businesses are also done by a separate division internationally.
  • This division is headquartered internationally in New Jersey.

 

About CIBIL Score

CIBIL score is a numbered scale in the range of 300 to 900. 700 is good for the approval of loans and credit cards. Every time any individual or business applies for loans or credit cards, the issuing authorities check the CIBIL score to assess the transaction’s risk. If they agree to the risk and interest rate ratio, they will approve the transaction. If the score is good, the interest rate might get reduced in view of the institution’s surety of payment. If the score is low, the application may get rejected. 

Method

All CIBIL scores are attached to the PAN card number of the entity in India. PAN Card is the taxation number that is unique to an individual or business and can be used to check the CIBIL score from this private credit assessment bureau.

How to check the CIBIL score?

www.cibil.com allows the facility to generate CIBIL score free with a free credit score if an individual provides his/her details. To find your business credit score, follow the steps below:

  • Visit the official website of CIBIL.
  • Click on the check CIBIL score. 
  • Enter the details that are asked, including attachment of proof scans such as a scanned PAN card.
  • The score will be emailed to you free of cost.

Alternative Innovation to check via SMS

  • Give a missed call to 8287151151
  • This number will get added to WhatsApp chat
  • Send details like:
  • Name
  • Date of birth 
  • Gender
  • PAN number
  • Residential address
  • Email ID

CIBIL scores

CIBIL scores are important if you want to take loans. Loans and credit cards make the taker steeped in the financial stress of repayment. However, if the standing is acceptable to both parties, credit scores in modern times allow for better trust, acceptance, and standing in the free markets. 

Various options of credit scores reflected in the CIBIL report and indicative of an individual’s credit health:

Credit scoreCredit health
750 – 900This is a perfect score which will help the individual to get the best option for loans or credit facilities available in the market. This signifies the person’s good-paying capacity and how consistent he is with maintaining financial relationships with lenders. Any type of credit, whether a credit card or a loan of any kind, can easily be availed by a person with this credit score.
700 – 750This is a good track record, and many options to avail credit will be open to an individual with this score. But still, this is not the best rating as financial institutes may delve into other parameters to further look into the individual’s financials as per internal credit policies.
550 – 700This is a very average credit score and generally will not be accepted by many financial institutions to provide credit to the individual. This will be applicable only in case the individual wants to apply for a secured loan or if he is ready to pay a higher amount of interest on a credit received.
300 – 550This is a poor credit score that could have been affected due to the non-payment of EMIs or missed payments on the credit card. Even settling a loan or other minute factors may have caused this dip in the report. This may hamper the possibility of getting credit from the market.

 

The kind of credit rating required mandatorily before applying for a certain category of a loan in India: 

Type of LoansCredit score required as per CIBIL report
Gold loansNot applicable
Car LoansCredit score should be above 700
business loansCredit score should be above 700
Loans against propertyCredit score should be above 650
Personal loansCredit score should be above 700
Home loansCredit score should be above 650

 

Why is it necessary to track the CIBIL score?

One needs to keep a constant and vigilant check on his respective CIBIL score and credit rating due to the following reasons:

  • An individual should be keeping track of his existing loan accounts, whether a credit card or a loan taken from a bank. If there are any errors in the reporting, he can flag the issue immediately, and the claim for a correction in any inconsistency is found.
  • Ensure accuracy in the payment procedure and the relationship that the individual shares with financial institutions. In case of a dispute, he can also file a claim at the dispute resolution forum of CIBIL.
  • Constant checking of the CIBIL scores helps you maintain your financial and credit health. It is imperative to be a good payer and have healthy credibility and goodwill in the market to save it for rainy days. For any financial emergency, the same can be utilized. 

Reasons for creating a good CIBIL score as a practice for profits

There are so many reasons why a good CIBIL score is going to create security and help in times of any stressed finances. To not take loans in bad times is good sense. To take loans and repay on time and create a cycle of credit, trust is financial sense. It gives an extra time of funds holding till payment if nothing else.

Some reasons –

  • Increases eligibility for taking loans.
  • Gives access to the best credit cards in the market, as per the consumption of the person. Such as those that are heavy on petrol or online shopping or those that are best for bill payments, dining, or flight tickets.
  • Authenticity for a lower rate of interest – If you or your business has a good credit score, you will get a lower interest rate on a loan. These loans can be of large amounts, such as home loans, auto loans, or others. Then, even a minor fluctuation can save thousands or more of rupees.
  • To build a credit history – A good credit history is a mark of good financial understanding and builds trust in the market. 

Contents of a CIBIL report

A CIBIL report has the following details:

  • Personal details of an applicant – name, age, gender, and address.
  • Employment history and earning details.
  • Details of lenders who have made a formal enquiry about the person’s status as a credit score holder.
  • All previous loans and their details.
  • Defaults on loans, if any.
  • Settled loans, if any.
  • Total credit limit and amount spent monthly.
  • Credit card payment defaults.
  • Credit Score ranges from 300 to 900. Where 700 is a good score for getting most loans.

Method of Calculation

Each time a loan is taken and paid off, the details are entered into CIBIL records. These are kept by banks and Non-Banking Financial Corporations that then pass it on to CIBIL. These amounts, dates of purchase, and release and details about any issues such as late payment, discount on interest rates, and any disputes arising are written in the report each time.

Factors that affect the CIBIL score

A lot of factors affect the score. Credit history alone makes up 30% of the score. Missing due dates alter the score negatively. Utilization of credit is another factor in filing multiple credit applications and an increase in credit limit. If we raise the credit limit frequently, institutions or banks take that as a sign of negativity. Below are the main factors that affect the CIBIL score of a person or firm:

  1. Repayment History – How an individual or a firm manages his/her debts and liabilities is a matter of concern and directly impacts the CIBIL score, especially in case of payments of credit cards, EMIs, and other loans.
  2. Application of other credit cards or loans – the number of inquiries or applications made to get new loans or credit cards also impacts the CIBIL negatively.
  3. Maintain a balance in credit – One must maintain balance in applying for unsecured and secured loans. This shows proper management of funds and can enhance the chances of getting new credit facilities from the market.
  4. CUR or Credit Utilization Ratio – This is an imperative proportion that shows how much credit has been utilized compared to the total credit available. A high CUR may negatively impact the CIBIL score. 
  5. Increase in the credit card limit – This may not be known to many people, but the number of times a person requests to increase the limit affects the CIBIL as it enhances the limit of hard inquiries. This clearly shows the person’s dependability on credit and how the available limit is not enough for him. 
  6. Lack of credit history – Having no credit history is also not a good sign that shows a lack of involvement in the financial market. It makes it difficult for the lender to diagnose the person’s credibility and how good or bad he is with his repayment structure.
  7. Becoming a guarantor for the wrong person – Even if the individual has participated as a guarantor for a person who is a defaulter, it will adversely affect the CIBIL as the inconsistency of repayment will be clearly shown and reflected on the credibility of the guarantor as well.
  8. Errors in the credit report and financial information – Any error or mistake on behalf of the bank or financial institution may adversely affect the CIBIL score, so one should vigilantly check the banking and payment details.

How to improve the CIBIL score?

Here are some tips that a person can follow to improve his CIBIL score:

  1. The CIBIL report should be error-free: Every individual must be vigilant in checking his report now and then. He should check for any kind of inconsistencies or errors thoroughly. There are chances that due to a wrong filing of a bank statement or an error in computing, so constant checking of the CIBIL score and report is mandatory.
  2. Try and pay the credit card bill in full – Many people opt for paying the minimum amount due rather than making a full payment towards their credit card bills. This is again not suggested as it affects the credibility and CIBIL score of the person.
  3. Try not to utilize the entire credit limit – Plan a budget and try not to reach the credit card’s credit limit. This has a bad influence on CIBIL, as this shows the dependence of a person on credit.
  4. The individual should not miss or delay any payment.
  5. Any missed payment directly impacts one-third of the CIBIL score, so one should be very consistent in making timely payments and avoid missing any of his dues or EMIs.
  6. It is better to go for a secured loan – Keeping something as collateral or taking up a secured loan is a better deal to enhance the CIBIL score.
  7. Never got for a loan or credit card settlement – If the person is unable to carry on with a loan or credit card payment and thinks of settling his dues before the prescribed time, it has a poor influence on the person’s credit rating.
  8. Avoid too many credit card or loan applications – An individual should not fall in the trap of applying for every credit card or applying for newer loans. Every application turns into a hard inquiry and affects the person’s CIBIL.

Credit cards and loans are the essential modern tools of quick trades and timely funding if debiting accounts are not sufficient. Thus, it is important to ensure a good CIBIL score to be in the safety of an emergency where things could go wrong. Alternatively, if a bad score exists, not raising credit limits, not checking score frequently, paying the debt off as soon as possible, and following all procedures and practices promised to the banks and institutions is necessary.

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