A CIBIL score is one of the first things that lending institutions check before approving the borrowing request of applicants. It is a numeric representation of the creditworthiness of an individual. With a high credit score, getting approval on a loan request becomes extremely easy. CIBIL score ranges from 300 to 900. The CIBIL score range is further subdivided into mainly 5 categories according to creditworthiness.
What is the CIBIL score?
There are various types of credit scores in India, like CIBIL score, FICO score, etc. However, the CIBIL score is so popular in the lending industry that it has almost become a synonym for credit score.
TransUnion CIBIL measures this score for every individual borrower according to 4 parameters. These are credit history, credit utilisation, number of hard enquiries and credit duration. According to these parameters, they evaluate the credit score within the range of 300 to 900 and bring out a credit report. Lenders check these credit scores and reports of applicants who apply for a loan.
What are the CIBIL score ranges?
Check out the different sub-ranges of credit score to know whether your credit score is good or not:
- CIBIL score between 300 and 549: Such a credit score is deemed as ‘poor’. Individuals get such a score when there are multiple records of missing the due date of EMI under their name. Besides that, they may also have applied for loans many times within a short span. Lenders may not approve their loan requests to avoid risks of repayment failure.
- CIBIL score between 550 and 649: It is a ‘fair’ credit score. Individuals may get a score within this range if they fail to miss one or more EMIs or pay them irregularly. Also, instances of multiple credit enquiries can cause a score like this. Lenders may not agree to approve loans, or if they approve, they may charge a high rate of interest.
- CIBIL score between 650 and 749: It is regarded as a good CIBIL score. Individuals can secure or retain a score within this range by repaying on time. As a result, lenders get the confidence to sanction the loan to such borrowers. Lenders may charge a reasonable rate of interest
- CIBIL score between 750 and 799: A score within this range is esteemed as ‘very good’. One can secure and maintain such a score by paying EMIs of credit card bills and loans on time for a prolonged period. Individuals with a CIBIL score within this range can get their loan application approved easily.
- CIBIL score between 800 and 900: Such a credit score is ‘excellent’. It requires a prolonged practice of repaying on time and keeping a low credit utilisation ratio to get a score like this. With a CIBIL score within this range, individuals can get a large amount of secured as well as unsecured loans at attractive terms and affordable interest rates.
- CIBIL score NA/NH: NA/NH does not fall under any of the credit score ranges. It indicates that there is no record of your borrowing through credit cards or other credit facilities. As a result, the credit bureau TransUnion CIBIL has no record or history under the name of the concerned individual.
What is a CIBIL report?
CIBIL report is the detailed account repayment history of an individual. It contains detailed information about the loans individuals have taken along with the status of credit card bills. While the credit score helps lenders make initial checks about whether applicants are eligible for the loan, they must understand CIBIL reports properly to get a detailed outlook on their repayment behaviour.
Ways to check CIBIL score?
Here is the simple step-by-step process to check the CIBIL score:
Step 1: Visit the official website of TransUnion CIBIL
Step 2: Click on the ‘Get Your Free CIBIL Score’ button
Step 3: Create your account by entering the requested personal and contact details
Step 4: Verify your identity
Step 5: Log in to your account
After this, individuals will be able to check their CIBIl score from the website.
In this regard, people who want to avoid the process of creating their accounts on the website of TransUnion CIBIl can check their credit scores from the website of some financial institutions. There are some lenders who offer this facility on their portals to help their customers know their loan eligibility. For this, they will have to simply enter their basic details including mobile number and email ID.
How to maintain a good credit score?
Individuals need to maintain a positive credit profile to secure or retain a good credit score. Here are the ways to do it:
- Keep a tab on the credit utilisation ratio: Individuals may have a high credit limit on their credit cards. To ensure that they maintain a high credit score, they need to abstain from utilising the entire credit amount. Their credit utilisation ratio should ideally be lower than 30%.
- Pay EMI on time: Repayment history is one of the main factors that influence credit score. Individuals must pay all their EMIs on or before the due date. They can set a reminder if they do not want to miss the date.
- Refrain from applying for multiple loans: When applicants apply for a loan, the lenders make hard enquiries to TransUnion CIBIL or other concerned bureaus about the credit report. If such inquiries are frequent against the name of certain individuals, their credit scores can reduce. This is why individuals should not go for requesting credit multiple times after lenders disapprove their loan requests.
- Avoid cancelling unused credit accounts: The credit history has also a significant impact on the overall CIBIL score. When individuals close their unused credit accounts, the average credit duration decreases, thereby lowering the credit score.
Individuals with a history of borrowing get a 3-digit CIBIL score between 300 to 900. Within this CIBIL score range, individuals should try to maintain a healthy score of at least around 750. Otherwise, lenders may not get confidence in their creditworthiness, and resultantly may not agree to accept their loan requests.