CIBIL score is a term that we folks have been aware of only in the past few years. Actually, it came into existence in 2000. As consumers we were not aware of it as we were not as digitally connected then. It was just something banks did to decide to approve our loans or not. Now, whether it is a home loan, car loan, personal loan or even if we need a credit card, our CIBIL score becomes an important factor. If you don’t know what your score is and need to do a credit score check, it is easy to do it online. But before you do, there are a few things you need to know.
CIBIL stands for Credit Information Bureau (India) Limited. This credit score is provided by 4 authorized agencies. They collect and maintain all information regarding an individual or company’s payments of loans and credit cards. It does not collect any other information of bank accounts as many people imagine they do. CIBIL Score Range for an individual is from a low of 300 to a high of 900. Within this CIBIL score range , anything above 700 is considered a good credit score. Credit Rank applies only to businesses and is in a range between 1 and 10.
Many of us are confused why our credit score is different on different sites. Don’t worry, this small discrepancy is usual because of the difference in the updated data collected by different credit bureaus. Also each agency uses a different scoring system. In India, we most often get our credit score from TransUnion CIBIL.
Every month, your payment data is sent by banks and other financial institutions to the four agencies that compute credit scores. All your repayments, closures, new applications, defaults and interest payments from each account contributes to your score calculation. This data is then processed through complex algorithms and provides a 3 digit CIBIL score. All details of each account contributing to your CIBIL score is detailed in your CIBIL report. You can request this CIBIL report once a year for free, your CIBIL score on the other hand can be requested multiple number of times.
Since the CIBIL score is of huge importance when it comes to applying for a loan or a credit card, what happens to those who have got no previous loans or credit cards? This is a question that is asked often, particularly by young adults. Don’t worry, absence of a credit score which is shown as a zero credit score does not mean getting a loan is difficult. Other factors also are considered when a loan or credit card application is approved. Do remember that even if you are a new credit card holder, it takes 6 months of payment history before you can be considered for a CIBIL score.
Do remember that everyone with a payment history has a CIBIL score, even if you have never asked for it. So it is good to know yours even if you have no intentions of applying for any loan or a credit card. So where do you check for it? Many third party sites will give you this information. I’ll get to later in this article about why third party sites are best used to get your credit score. But before that, these are the steps to follow to get your CIBIL score online.
Step 1: To get your credit score you will need to fill in an online request form
Step 2: You will need to enter this information so keep it handy. Your PAN card details and email address. Of course also your name as entered in your account i.e your credit card and loan information
Step 3: Enter your mobile number as you will need an OTP verification
Step 4: Click submit and your CIBIL Score Report will be emailed to you
Myth 1: Many people believe that if they don’t request for a CIBIL score then this information will not exist. I am sorry to have to break this nice little misconception. Your first credit card or first loan, whichever came first, would have generated your credit score.
Myth 2: A low CIBIL score does not mean you can never get a loan. Different banks and financial institutions have different rules.
Myth 3: Many people think it is better to ask their bank to find out their credit score. It is NOT true and in fact can be disastrous. Getting your credit score through a third party is considered a soft enquiry and will not affect your credit score. When a bank asks for this information, it is considered a hard enquiry and it will affect your credit score. A hard credit score enquiry will affect your score for up to a year.