Information about CIBIL

The Credit Information Bureau (India) Limited (CIBIL) is the credit information company licensed by Reserve Bank of India. Earlier, banks were finding it difficult to verify customer’s background for credit worthiness before approving of loan. Credit Information Companies are specialized institutions who maintain and record related credits and loans of customers and commercial entities.

This company is engaged in maintaining the records of all the credit-related activities of companies as well as individuals i.e. credit cards and loans etc. The registered member banks and several other financial institutions periodically submit their information to CIBIL. Based on the information and record provided by these institutions, CIBIL issues a CIR (Credit Information Report) as well as a credit score which provide lenders to an idea about customer’s present and past borrowing history including their repayments.

CIBIL Score is a 3-digit numeric summary of your credit history, rating and report, and ranges from 300 to 900. Banks and most of the financial institutions prefer extending credit to an individual whose score is 750 and more. Individuals with good credit scores are less likely to default on their loan payments. Banks generally provide loan to the persons who has a low score but charging higher rate of interest as compared to people of high score.

A credit history is a record of a borrower's repayment of debts. A credit report is a record of the borrower's credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. The CIBIL score plays a critical role in the loan application process. When someone approaches a bank or a financial institution for a loan, the lender first checks the applicant’s CIBIL score and report. If the CIBIL score is low, the bank may not even consider the application further. If the CIBIL score is high, the lender will look into the application and consider other details to determine if the applicant is credit-worthy.

• Collaborate and collect all credit related data from the market and create a Credit report. To provide all relevant information regarding the credit history of the loan/credit card applicant to the Lender.
• Bring transparency and help Lenders evaluate the credit worthiness of the applicant.
• Credit Report and Credit Score to help the lenders to determine the eligibility of the Applicants and the quantum of loan or credit limit which can be extended to an Individual.
• Speed up the Loan Approval process for the borrowers and mitigate the risk of the lenders by providing detailed financial reports.

• Payment history i.e. repayment of EMI’s and Loans etc.- Timely repayment of EMI’s and Loans etc. would increase your CIBIL score, which helps the loan providers to decide whether you can repay the loan obligation or not. A repayment history with EMI defaults or late payments could negatively affect your credit score. Good CIBIL score would help you to take any credit from banks and financial institutions at a genuine rate of interest otherwise your credit application will be rejected or if credit is provided, interest will be charged at higher rate.
• High Credit Utilization Ratio- Credit Utilization ration is another key factor which could impact your CIBIL scores. Credit utilization ratio refers to the total amount of credit used against the total amount of credit that you’ve been authorized. High Credit utilization ration also affect your CIBIL score. The experts suggest that individuals should try and keep the credit utilization ratio in the range of 25-30 % for maintaining a good CIBIL score report.
• Excess Personal Loans/ Credit Cards- Credit cards and personal loans both are unsecured loans. Too many credit cards and high amount of personal loans with no secured loans such as an auto loan or home loan could have a negative impact on your CIBIL score. So, if you have a balance of both the secured as well an unsecured loan, it might lead to a positive impact on the CIBIL score. Having a balanced between secured loans and unsecured loans is likely to have a positive effect on your score

You can improve your score by practicing financial prudence-

• Always pay your dues i.e. repay your credit card bills on time, don’t’ miss your loan repayments, don’t miss your loan EMI’s etc.
• Having a balance between secured loans and unsecured loans
• To keep low and control your credit utilization ratio.
• Monitor your CIBIL score and report regularly to avoid unpleasant surprises in the form of a rejected loan application.