What is CIBIL Score and a Credit Information Report (CIR)?

CIBIL Score is a three-digit numeric summary based on an individual's credit history. This credit score is determined using Credit Information Report (CIR) which refers to an individual's credit payment history across various types of loans over a period of time. Please note that a CIR does not display you savings, investments or fixed deposits details.

Why is CIBIL score important for getting a loan sanctioned?

The CIBIL TransUnion Score plays an important role in each loan application process. Checking credit score (CIBIL Score) and credit report of an applicant is the foremost thing that a lender does before even considering handing out a loan to the respective applicant. The higher the credit score, the stronger the chances of getting a loan sanctioned. Low credit score and bad credit history can simply lead to loan rejection. Please note that CIBIL - as a statutory body, does not have any say in getting a loan / credit card sanctioned or rejected. The decision of extending loan is completely a lender's discretion.

How can CIBIL score be improved?

You need to maintain a good credit history for improving your credit score (CIBIL Score). It will give the right impression to your lenders. You can do it by following simple rules such as:

  • Make sure that your dues are paid on time.
  • Avoid late payments.
  • Maintain low balance.
  • Refrain from using too much credit. Maintain balance in terms of credit utilization.
  • A healthy balance of credit is mandatory for you.
  • You should try to maintain a perfect balance between secured and unsecured loans.
  • Avoid obtaining too many unsecured loans.
  • You should be moderate in terms of new credit application.
  • Be cautious while applying for new credit.
  • Keep a tab on your co-signed, guaranteed and joint accounts and properly assess them on a monthly basis.
  • You are equally liable for a default in case of co-signed, guaranteed or jointly held accounts.
  • Your can have difficulty in accessing credit if your joint holder (or the guaranteed individual) commits any negligence.
  • Make it a point to evaluate your credit history on a frequent basis.
  • If you want to avoid loan application refusal, then buy your CIR from time to time.

What all factors affect CIBIL score?

Your credit (CIBIL) score can be mainly affected by four factors:

Payment history

If you have a record of late payment or EMI default, it can have a negative impact on your credit score. Besides, it will give an impression that you are facing troubles in paying your current debts.

High utilization of credit limit

Excessively spending on your credit card can be a hindrance in having a good credit score. Similarly, if there is an increase in the current balance of your credit card, it shows that you are having an increased repayment burden, and thereby affects your credit score negatively.

Avoid having excessive unsecured loans

If you manage to maintain a right balance between the secured loans (home loan) and unsecured loan (personal loan, credit card etc.), it will have a positive impact on your credit score.

Avoid opening many new accounts

If you have recently availed multiple loans and credit cards, then lenders can draw a conclusion that you have increased debt burden. It will put your credit score down.